Equity Live: Bret Taylor’s $4.5 billion startup and Waymo’s $5.6 billion round

The Equity crew was live at TechCrunch Disrupt 2024! Hosts Kirsten Korosec, Devin Coldewey and Margaux MacColl took over the Builders Stage to kick off day 2 of Disrupt with no shortage of conference highlights, startups deals and venture news to chew through. Listen to the full episode to hear about: Devin’s plans to go to space thanks to his chat with Rocket Lab Founder Peter Beck. What Sierra, the AI startup co-founded by Bret Taylor, plans to do with its fresh $175 million funds. Waymo’s who’s who of Silicon Valley round, and why Kirsten’s routing for the robotaxis over the competition. How General Catalyst is breaking down its latest fund and setting its sights on European startups. Equity will be back with a special interview episode on Friday, so stay tuned! Equity is TechCrunch’s flagship podcast, produced by Theresa Loconsolo, and posts every Wednesday and Friday. Subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. You also can follow Equity on X and Threads, at @EquityPod. For the full episode transcript, for those who prefer reading over listening, check out our full archive of episodes over at Simplecast. Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products. Learn more about your ad choices. Visit megaphone.fm/adchoices

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

• 0:11Speaker 00

  Hey.

• 0:12Kirsten Korosec?

  Hey.

• 0:13Speaker 02

  Hi.

• 0:15Kirsten Korosec?

  Hello and welcome to the Equity Podcast Live, which is always exciting. I did this last year. Last year I wore like a full sequin jacket, but I didn't want to outshine you Devon, so.

• 0:27Speaker 00

  I was gonna wear one today as revenge, but no, it's probably better this way.

• 0:31Kirsten Korosec?

  I decided tweed was more suitable for like, you know, your vibe.

• 0:34Speaker 00

  Tweed? I have some tweed.

• 0:35Kirsten Korosec?

  Sure. A little bit. Yeah.

• 0:37Speaker 00

  It's textured.

• 0:38Kirsten Korosec?

  It's textured. Well, enough fashion talk. Thank you for coming this morning and we're gonna talk about a lot of stuff, but one of the things I want to touch on a little bit is a little bit of a recap from yesterday. Margot, you had a panel yesterday.

• 0:52Speaker 02

  I had two panels yesterday.

• 0:53Kirsten Korosec?

  Okay. Tell us a little bit about them.

• 0:55Speaker 02

  Yeah, I did one on the stage for finding product market fit and then I did one in the afternoon about banking as a service after the collapse of Synapse.

• 1:04Kirsten Korosec?

  Okay. And what'd you learn?

• 1:06Speaker 02

  I learned that banking as a service is tough and that it's gonna be a long road ahead.

• 1:11Kirsten Korosec?

  Yeah, similar to what I cover, which is cars, which is building cars is hard. That's why so many fail.

• 1:16Speaker 00

  Isn't banking already kind of a service?

• 1:18Speaker 02

  So a lot of people have asked me that and yeah, it is. Sort of the essential part of it. And then you interviewed Peter Beck yesterday with Rocket Lab.

• 1:28Speaker 00

  Yeah, that was over the industry stage. That was great. Peter's always great. We talk a lot and you know, we're best buds and he's always just a really genuine, like interesting person to talk to about not just his own company, but the space industry is obviously very well informed, extremely smart guy. He's built this whole huge company that I still think of when I think of it, I think of it as him and his friends like putting together rockets in the like hinterlands of New Zealand when like, no, this is one of the most important people in the space industry and has like created this really like gigantic and dynamic company.

• 2:00Kirsten Korosec?

  So since you're such good friends, does he invite you into the hinterlands and you just like monkey wrench on the Venus spacecraft?

• 2:06Speaker 00

  He has invited me out, but it's very, very far.

• 2:09Kirsten Korosec?

  I was actually making a joke, but.

• 2:11Speaker 00

  I think it's one of those, I think it's one of those invitations where it's like, oh, you must come over sometime. And it's like, yes, to New Zealand. Like that is not an option for me. And he's like, yes.

• 2:19Kirsten Korosec?

  Can you go to space?

• 2:20Speaker 00

  I thought I was gonna go to space, but not on Rocket. I thought I was gonna go on Virgin Galactic. They were giving me all these hints, but it was just because they wanted me to come to this event. It was not going to space. I was very disappointed. I was like, I'm not coming to your event either.

• 2:33Kirsten Korosec?

  If you, you know, can last five hours through some PowerPoint presentation, then you get to go to space.

• 2:39Speaker 00

  I do.

• 2:39Kirsten Korosec?

  You would fail every time, by the way.

• 2:41Speaker 00

  I think we'll have the chance to go to space. I guarantee you guys will be able to have the chance to go to space. It won't be like, but like on New Shepard or whatever. Once the price comes down, it's just gonna be like an expensive vacation. Go to space. I guarantee it within 10 years, it'll be like.

• 2:55Speaker 02

  But is it the lame space? I wanna be like.

• 2:56Speaker 00

  It is the lame space, yeah, unfortunately.

• 2:59Speaker 02

  It's like, it's like you just go to the edge. You're not like.

• 3:01Speaker 00

  Yeah, you like touch the Karman line, which is the 100 kilometer line. Unfortunately, you probably won't be getting much microgravity or, you know, doing orbit or anything. That'll cost, that'll stay hella expensive.

• 3:13Kirsten Korosec?

  I think we could just expense it on the corporate card.

• 3:14Speaker 00

  I can do that. Yeah, we can do it. I think you're the senior person here, so you have to go on your card.

• 3:19Kirsten Korosec?

  Yeah, I can't wait to use Concur for that. Awesome, awesome software, by the way. We should talk about some deals. I wanna start off with Sierra, the AI startup co-founded by OpenAI Chairman Bret Taylor, because Bret Taylor is actually gonna be here today. I don't know if you knew that, but Frederick's gonna be interviewing him, I think around 2:20 today, so you all should definitely check it out. Talk to me about this deal.

• 3:40Speaker 00

  It's boring in the valuable way. You know, when you see something and you're like, oh, that sounds really boring. And then you read it and you're like, yeah, that probably is gonna be a really valuable business, though. It's most of like Salesforce-related stuff. No offense to Salesforce people here, but it's like enterprise software, SaaS stuff. It's not super exciting in a sort of visceral sense. And so we have this AI company that is gonna be focusing on customer service, chatbots essentially. I say chatbots because apparently he hates it when you say it's chatbots, but like, it's chatbots. Let's be honest here. I mean, and we've had chatbots for a long time, but the original chatbot, you know, sort of explosion was very bad. And they were very bad. No one wanted them. And apparently the new chatbots are gonna be way better.

• 4:21Speaker 00

  And that's why someone gave him $175 million. The total is 285 now, million, valuing the company at 4.5 billion.

• 4:30Speaker 00

  That's huge. And I mean, they have some deals in place with Weight Watchers, Sirius. You know, they're getting in these big brands, probably because he has all the ins with everybody from Salesforce and OpenAI. They know that, you know, he can run a business. That's good, but it doesn't really feel like AI to me. You know, like when they're like,

• 4:48Kirsten Korosec?

  What does feel like AI to you? Because I feel like, you know, you like to poke holes in AI.

• 4:54Speaker 00

  Certainly, it's not. It doesn't feel intelligent. It just feels like a chatbot, like a better chatbot. You know,

• 4:59Kirsten Korosec?

  Are there not a million companies doing AI chatbots right now?

• 5:03Speaker 00

  There are a lot, and there's a lot. There are plenty doing customer service as well. So I mean, I'm skeptical of the value in that sense. I mean, sometimes the big 900-pound gorilla comes in and takes over the market. Maybe that's what this is. But there genuinely are other, you know, options already that may or may not be better or worse. Like, I've not, I have not myself run a customer service chatbot. So I don't know what's needed. Maybe this one is a breath of fresh air. And they're like, oh, finally, I can pick between models and I can iterate and I can do this and I can adjust the personality to be more or less, you know, servile or whatever. Maybe this is the chatbot to rule them all.

• 5:36Kirsten Korosec?

  Well, and Bret Taylor does have the experience potentially here to rise above the rest, right? Because he

• 5:45Speaker 00

  And the money.

• 5:46Kirsten Korosec?

  But the experience, he was at Salesforce for more than a decade, right? Or about a decade. And so this is someone who absolutely knows enterprise software and what people are looking for. To Margot's point, there are a million chatbots out there. So what is it going to take to get the ones that are usable and that people want?

• 6:03Speaker 00

  I guess we'll find out because I think that people are still exploring this space. Like personally, whenever I get a chatbot, I immediately tell it, please tell me. I don't know why I say please, but I say, please let me speak to a

• 6:13Kirsten Korosec?

  Very polite.

• 6:14Speaker 00

  And it immediately reroutes me to a human. And I'm just like, oh, good, because this will certainly solve my problem, you know, in, you know, returns or insurance stuff or whatever. I'm like, I don't want to deal with the AI. I don't know what its capabilities are. I don't know what it has access to or not. And if I deal with it for five minutes, and then it's like, oh, sorry, your problem is too complicated for me, I'm going to hand you to a human. I'm like, well, just give me the human in the first place. So that's my experience with chatbots. And I imagine it's, you know, because I project myself onto the world. I imagine that's the experience for millions of other people. So I think that this is a purely cost-saving measure by these companies, which rarely is also a good thing for customers.

• 6:52Kirsten Korosec?

  Right. This has been a theme on the show, especially when it's been around things that are Let's say high touch in like rentals, like landlords. We were talking months ago about, you know, an AI chatbot that would like route you and deal with supposed like maintenance and stuff. But if you are a renter, it's like you kind of want to talk to the landlord human.

• 7:09Speaker 00

  Yeah, yeah. The fact that they're doing it tells me that they save money, that they get a benefit from this. And if the company, if Weight Watchers or whatever, it gets some sort of benefit from having this AI chatbot instead of, you know, a customer service agent wherever, then it doesn't follow that I also benefit. It's certainly they benefit because they've made this choice. So I just view it from that lens. And maybe it'll be a positive too, because sometimes, you know, we, what's better for them is better for us, but it's not always the case.

• 7:37Speaker 02

  So I was looking through it and like with every AI deal, I was trying to figure out what's different from the million other AI deals. Something that struck me as interesting, and I'm really curious if this actually is very different, was it talked about how the tech uses one model to do the heavy lifting with the expectation that it won't be 100% reliable, and then it uses a second model as a backup to like check its work? Is that something other companies are doing? That was the first time I had heard of that.

• 8:01Speaker 00

  These kinds of like overseer models are pretty common. You just have like, you have the big model, and then when it says something, it goes through a little overseer model that like basically says like, is this racist or is this egregiously incorrect?

• 8:14Speaker 02

  And it's able to use different, like I'd use Anthropic to check OpenAI.

• 8:18Speaker 00

  I do not, I mean, people are almost certainly doing that and like mixing and matching, but the industry is moving so fast. Having an overseer model is very smart. And there's other companies that do that, so they probably are hiring someone else or maybe they've made their own. But as you mentioned, they don't make their own foundation models. A few people do now, you know, you open AI or Claude or whatever. But having an overseer model and then like their own little models that sort of customize it or whatever, that's a non-trivial amount of work and differentiation, I think.

• 8:45Speaker 02

  Interesting.

• 8:45Speaker 00

  They say that there's less hallucinations though. I don't know why that.

• 8:48Kirsten Korosec?

  Yeah, I was gonna ask. So the point of this, I'm assuming is for it to be two things, less hallucinations and the analogy or given the example you were giving a little bit ago was about how you would get frustrated with a chatbot. So the assumption here is that they're smoothing that out. But I don't know if I've had a chatbot that I've interacted with, and maybe it's just a reflection of the fact that I never interact with them. I don't get hallucinations from chatbots, but I don't use them a lot. Do you?

• 9:15Speaker 00

  No, no, I hardly ever use them at all. But I can picture it.

• 9:18Kirsten Korosec?

  I do, sure.

• 9:18Speaker 02

  Yeah.

• 9:19Kirsten Korosec?

  Yeah. Because you're asking them questions that they're like out of the scope of what they should know?

• 9:23Speaker 02

  Or I'll be asking it a series of questions and it'll like not take into account the first message and give me something completely different. I think there's kind of like a long-term memory issue.

• 9:33Speaker 00

  They're getting better at this and reducing hallucinations is a big thing, but we should probably move on, huh?

• 9:37Kirsten Korosec?

  Yeah, we should move on. Um, well, okay, so the deal that I want to talk about happened a few days ago. This is Waymo and I'm sure all of you who don't live in SF and the ones who do have been hopefully trying them out and they're everywhere, all over Soma, all over San Francisco.

• 9:54Speaker 00

  I see them.

• 9:55Kirsten Korosec?

  But the news here is, is that they raised $5.66 billion. Now, back in July, the company did raise $5 billion, so this is really just an extension to that. And what I find so interesting about Waymo, you know, this is an Alphabet company. Unlike other companies like Zooks is going to be on our stage tomorrow, they have brought on external investors. And so you get a little bit of insight in how much money they're spending. Zooks, owned by Amazon, doesn't do that. So you don't really have any insight into what they're spending, what the cash burn is. GM, GM CEO and Chairman Mary Barra is going to be here today. You know, they did external investors for Cruise, the AV company they bought, but then they actually bought those external investors out again.

• 10:40Kirsten Korosec?

  So there's a lot of money moving around here, but I just find it really interesting. Gives you a tiny little bit of insight into Waymo and like what their cash burn is. Basically, short story, a lot, a lot.

• 10:51Speaker 00

  A lot. If you wonder, we were talking about this backstage and it's like, how much money do you think those cars themselves, like we don't expect them, those to be the production cars, obviously, but like each one of those cars, like the little, what do you call them? The chicken?

• 11:03Kirsten Korosec?

  The chicken butt?

• 11:03Speaker 00

  Chicken butt?

• 11:04Kirsten Korosec?

  Chicken.

• 11:05Speaker 02

  Is that what it's called?

• 11:05Speaker 00

  Chicken bucket. It's not a chicken butt.

• 11:07Kirsten Korosec?

  No.

• 11:08Speaker 02

  That would be crazy.

• 11:09Speaker 00

  Chicken bucket. They call them chicken buckets because they look like a KFC bucket.

• 11:12Kirsten Korosec?

  Yeah, KFC bucket.

• 11:13Speaker 00

  But those, those Velodyne chicken bucket.

• 11:15Kirsten Korosec?

  Yeah.

• 11:15Speaker 00

  LIDAR is, each one of those costs as much as a regular car. A lot of them do anyway. And you got like 10 of them on the thing, along with all the electronics. Like you're looking right off the bat at like, you know, more than half a million dollars probably in the $700,000 range, don't you think?

• 11:28Kirsten Korosec?

  I think the costs have gone down. First of all, like lidar costs have gone down extremely because if you remember back in like, I want to say 2018, during the midst of the hype cycle of AVs, every company was going after lidar. And a lot of them have shut down. And they've also pivoted to, oh, marketing for advanced driver assistance, you know, trying to get in on production cars. So the cost of lidar has absolutely fallen.

• 11:52Speaker 00

  Those spinners, though, I mean, because there's flashlight, or there's all the like 20 different kinds of lidar.

• 11:56Kirsten Korosec?

  Yeah. Waymo developed their lidar in-house. So you might remember a few years ago, they actually launched, kind of like as a pilot, a business where they were going to sell lidar to other industries, not AVs. And that has, they don't talk about that much anymore. I'm guessing, I'm guessing sales weren't amazing.

• 12:15Speaker 00

  Probably because it costs exactly what I suggested before.

• 12:17Kirsten Korosec?

  Yeah.

• 12:18Speaker 00

  I'm gonna guess.

• 12:19Kirsten Korosec?

  Do you have a guess of how much it cost? Yeah, I think that each car is about $300,000 to $400,000 total.

• 12:24Speaker 00

  So we're, we're in agreements in principle here. These are supercars.

• 12:27Kirsten Korosec?

  Sure. I just want to be right.

• 12:28Speaker 00

  All right.

• 12:29Kirsten Korosec?

  Okay.

• 12:29Speaker 00

  I'll allow it.

• 12:30Kirsten Korosec?

  But if you think about it, it's not just the hardware. Hardware costs are falling. The issue here is, is that it's the business model. So robotaxis, people are using, you know, I've used them a lot. Every time I'm here, I try them out. And then I also, at the same time, pull up my Uber or Lyft app and see what the cost differentiation is. And sometimes it's on parity, and sometimes it's higher, sometimes it's slightly lower. But there is a human cost. There are humans still supporting a Waymo robotaxi. Quite a few. I mean, not a ton, but there is a cost associated to that. In what way? How are humans still? So, well, first of all, they have operations centers, so they're watching. There's a call center. You know, you can call a Waymo operator if you have any problems.

• 13:14Kirsten Korosec?

  Am I being watched when I'm in a Waymo? I mean, they have cameras in there.

• 13:18Speaker 00

  For sure.

• 13:19Kirsten Korosec?

  Yeah. But there is a thing called remote guidance. Some people call it also teleops. This isn't joystick driving a vehicle because that would be like cellular latency is an issue. But this is, you've probably seen it, like a Waymo all of a sudden is behind a double parked vehicle. And what does it do? How does it, you know, it will, human folks, Waymo, yeah, thank you. Not robots will be watching that. They'll let the car make its decision. But if for some reason gets stuck, they will send what's called path planning or like a software code and then the vehicle will make that decision and move on. So there is human support there.

• 13:57Speaker 02

  Interesting.

• 13:58Kirsten Korosec?

  And there's a cost to that.

• 13:59Speaker 02

  Yeah. Where is like Tesla at with theirs? Like who's the biggest competitor to Waymo right now?

• 14:03Kirsten Korosec?

  Okay, so let's all be clear. I'm sure people, I'm going to get so many like evil DMs. Tesla FSD is not full self-driving. The human is expected to take control. Are there automated features? Yes. Can it work in a city? Yes. But the reliability and responsibility is on the human driver. You are technically not supposed to have your hands off the wheel and you can't go like sleep in the back. And that's the difference between a Waymo in which you can do that, right? There is no liability to the human in the vehicle. The liability rests with Waymo.

• 14:32Speaker 02

  I took a Waymo for the first time yesterday and Julie, my editor, she was like, I sat in the front and she was like, you know, you're going to have to like make calls, like the touchscreen is going to tell you like, you need to tell them if there's a kid in front of you.

• 14:43Kirsten Korosec?

  No.

• 14:44Speaker 02

  She was joking and I was terrified. I was like looking out for children.

• 14:48Kirsten Korosec?

  Yeah, no, that would be a crazy business model if like the

• 14:51Speaker 02

  The person in the front seat.

• 14:52Kirsten Korosec?

  Be a really interesting video game.

• 14:54Speaker 02

  Yeah.

• 14:55Speaker 00

  I've seen, well, I don't know, Bret Taylor's new thing.

• 14:58Kirsten Korosec?

  Oh.

• 14:58Speaker 00

  No. Uh, but is Tesla, but Elon's talking about, oh, flip the switch and all the Teslas. Is that, but they're still fully optical, right? Like they're just using camera.

• 15:07Kirsten Korosec?

  They're just using cameras.

• 15:08Speaker 00

  That's crazy.

• 15:09Kirsten Korosec?

  They have talked, yeah, and there's a lot of debate about it. There are some people out there who say that eventually cameras will be able to do this. And there's a lot of debate on also where those cameras are placed. But you know, a Waymo or a Zooks or any of these other companies, they have a ton of built-in redundancy that a personal Tesla Model 3 with full FSD software doesn't have. Redundant compute, redundant braking, redundant steering, all sorts of other things. So. Just a couple of weeks ago, Elon said, by next year, we expect to be able to have the approval to operate these army of robotaxis, which are the personal vehicles in California.

• 15:52Kirsten Korosec?

  And I will place a bet right now that that will not happen. Even if it was capable, which I don't, I think they have a lot of problems on that side. Quite frankly, it is an arduous process to be able to do that. There are two agencies in California. Ask Waymo how long it took. Ask Cruise, which can't even operate here. It's a long path. And as far as I know, they haven't really gone very far down that road.

• 16:14Speaker 00

  But he's just, he'll still be right because he said, well, we only said that we expect.

• 16:18Kirsten Korosec?

  Right, true.

• 16:19Speaker 00

  That's not a lie. I was telling the truth.

• 16:21Kirsten Korosec?

  And we all like, a lot of people, I mean, I've been covering Elon and the world of Elon for a long time and it's, I think a lot, people give a lot of grace to Tesla for the timelines that, or the deadlines, let's say, that don't quite happen.

• 16:34Speaker 00

  Right.

• 16:34Kirsten Korosec?

  Because eventually it'll happen, right? But we'll see, like, will he launch it in Texas? That's the other state. Very different regulatory environment.

• 16:41Speaker 02

  Yeah.

• 16:41Kirsten Korosec?

  But will you take another Waymo again is the question.

• 16:43Speaker 02

  I liked it.

• 16:44Kirsten Korosec?

  Yeah.

• 16:45Speaker 02

  They played like peaceful spa music, which I imagine is to stop people from freaking out. And it worked, it was very meditative.

• 16:51Kirsten Korosec?

  Well, you can actually change the music in there, too.

• 16:54Speaker 02

  I know, but it just changed it to another spa song when I tried. It's like they knew that I was gonna freak out.

• 16:58Speaker 00

  All spa songs.

• 16:59Speaker 02

  Yeah.

• 16:59Speaker 00

  Like, Enya, Enya remix. I love that.

• 17:02Kirsten Korosec?

  A lot of EDM.

• 17:08Kirsten Korosec?

  Maybe we should talk about General Catalyst and move on from robotaxis.

• 17:11Speaker 02

  All right, this is your deal. So, General Catalyst raised $8 billion in new funds for early-stage startups. It's broken down a little bit interesting. It's got 1.5 billion is earmarked for like, repeat or proven founders, which is kind of interesting because I feel like that's where most VC money goes anyway, but they've explicitly earmarked it for that. And then what I find really interesting is that they really emphasize that it's gonna be like, deployed internationally and they've made some very prominent moves to expand internationally. They actually merged with a Berlin-based firm and merged with an Indian-based firm. And what I find most interesting is that they invested in a Saudi startup for the first time. We don't know if Saudi Arabia is a part of this as an LP in the eight billion dollar

• 17:55Speaker 02

  funds, but I've talked to a lot of people in Saudi Arabia in the tech scene and it's definitely a thing that Saudi is like, if we're going to give you money, you have to deploy some of that in Saudi Arabia. Also, the only way we know if a startup has taken Saudi money right now, obviously if they tell us, but the PIF, which is like the big sovereign wealth fund, their website, they randomly published like a few years ago, the investment firms that they gave money to. It's unclear if they like ran that by those firms, but I used to be at the information and my coworker Becky Peterson just like stumbled upon it one day and was like, oh my God. And yeah, I believe that's how we found out that Andreessen Horowitz had taken Saudi money. So.

• 18:35Kirsten Korosec?

  Everyone's taken Saudi money.

• 18:37Speaker 02

  They are.

• 18:37Kirsten Korosec?

  In the transportation world, you know, we've got Lucid, who is like majority owned by the sovereign wealth fund. And you see a lot of startups in, in sort of like the frontier tech realm of transportation, like AVs and EV tolls. Flying cars, Devin.

• 18:53Speaker 00

  Yeah, flying cars, flying taxis. Yeah, it's private helicopter.

• 18:57Kirsten Korosec?

  Yeah.

• 18:57Speaker 00

  Stop, just stop calling it flying car.

• 18:58Kirsten Korosec?

  Yeah, yeah. We know the debate. We've had it many times. But they have absolutely like taken a lot of this money and have been encouraged to like set up shop there. So it's interesting to see now the involvement with VC funds and how that's going to play out there. Like, will they set up an office there? Will they be, like, where is that money going to go?

• 19:17Speaker 02

  My favorite anecdote when I was reporting on Saudi Arabia and investment firms going there is that the drivers at the main hotels have memorized the route from sovereign wealth fund to sovereign wealth fund because so often that is what they're hired for when investors come out there in the past like two years. They just, it's autopilot. They, they know where everyone's looking for money.

• 19:36Kirsten Korosec?

  Wow, fascinating. So a different kind of sandhill road, I guess.

• 19:38Speaker 02

  Yeah.

• 19:39Speaker 00

  I'm curious, a place like Saudi Arabia, obviously they have a ton of money.

• 19:42Speaker 02

  Yeah.

• 19:42Speaker 00

  A lot of people live there too. And there's obviously a different like innovation culture and stuff like that. I wonder whether it's possible to, you know, whether the innovators and founders, entrepreneurs in Saudi Arabia, do they want to grow their companies in Saudi Arabia? Or do they want to come to Silicon Valley? I mean, because this is, you find this split in many other. Like, oh, in this part of Europe, they like to stay because they have like in in Berlin, they stay in Paris, they leave in Norway, they stay in Finland, they leave. I wonder how it is in Saudi Arabia.

• 20:09Speaker 02

  You'll see a lot of companies in the Middle East just setting up their headquarters in Saudi Arabia. So it's a lot of companies from, yeah, across the region, which is what Saudi wants. Like Saudi wants to be what UAE has pretty effectively done and be a hub for the region. So, yeah, you obviously have some entrepreneurs there. I talked to one founder there who there was a point when he got so many term sheets from US based firms because they all were trying to take Saudi money. And there's not like a ton of Saudi based startups out there. So, yeah, he he got a million term sheets because they were all trying to, yeah, show Saudi Arabia that they would invest locally.

• 20:44Kirsten Korosec?

  I'm curious about the breakdown of this deal. So of this eight billion in new funds, you've got 4.5 dedicated to this core VC fund. And then this was kind of interesting to me, 1.5 earmarked for so called creation strategy. Do you know what that means?

• 21:00Speaker 02

  It just means basically repeat or quote unquote proven founders.

• 21:04Kirsten Korosec?

  Okay, so building like proven founders, building new companies.

• 21:08Speaker 02

  Yeah, again, I don't know why they decided to specifically earmark it for that because.

• 21:13Speaker 00

  It does, it seems a little weird. I mean, like, because obviously you would do would take that into account when you're like, oh, this founder, you know, either you fund them on the merits. Or you don't or on on the founders merits too. That's part of the it's not just, oh, here's the pitch, here's the company. You also think like, well, what's your experience as the founder? You're going to be the leader of this company. It's obviously a huge part of the evaluation process.

• 21:35Kirsten Korosec?

  But right, but why dictate that?

• 21:37Speaker 02

  I wonder if it's a deal with their LPs, right? We're obviously in a point when LPs are getting kind of tired of just putting money into VC firms and then not seeing it forever. So I wonder if LPs were like, okay, but you have to earmark some of this for really proven founders. Yeah, it might be a sign of the fundraising environment right now.

• 21:56Kirsten Korosec?

  Okay, well, then there's two billion for separately managed accounts. So typically like special investment vehicles created for a single institutional investor.

• 22:04Speaker 02

  I know I'm curious if you guys have thoughts about that. It was my impression that when funds want to raise a special purpose vehicle, they do it kind of like separately. It's interesting to me to have that money earmarked.

• 22:15Kirsten Korosec?

  Yeah, within, yeah, single fund, yeah.

• 22:18Speaker 00

  What's special about a special purpose? This is like, to me, this is like completely different language.

• 22:22Speaker 02

  So it's my understanding and people should let me know after if I have a poor understanding.

• 22:27Kirsten Korosec?

  I'm sure someone here will tell you if you're.

• 22:29Speaker 02

  Uh, I think a lot of firms did this for like investing in X. It's one, you don't necessarily, you're raising separate money from the money that you've already raised. Sometimes this is for, you know, big investments, controversial investments. It's kind of like a different deal you bring to your LPs and ask them if they want to invest in. And it doesn't necessarily take away from your main fund. That's my normal understanding of it. I have not heard of a, a fund raising money for that. It makes me wonder if there's a deal they're looking at that they've raised that money for. If they have some of the later stage companies that are going to be raising big rounds and they kind of told LPs like, let's give me an extra $2 billion and I promise that will go towards our really successful later stage companies.

• 23:13Kirsten Korosec?

  That sounds like an amazing scoop you should definitely work on.

• 23:15Speaker 02

  Yeah, if anyone here knows anything about that.

• 23:17Kirsten Korosec?

  A sign, it's given. You know, I want to go back to that creation strategy because I did forget to mention this. So the head of General Catalyst European Business said, if a founder is quote, looking to embed AI and looking to build a product, looking to co-develop and co-hatch products together with them. And they've already done that with Fever Energy. That's the Scandinavian climate tech company. So that kind of gives you a hint of what they're focused on. It's not just proven founders building their products, but specifically with an AI focus, it seems.

• 23:46Speaker 02

  Yeah, I think we're also seeing more firms do like more internal incubating. Lux Capital has done that for a long time. Founder's Fund does that like often. This could be their move to incubate more companies that they are, have more of a hand in from the start.

• 24:01Kirsten Korosec?

  Okay, so we talked a little bit about Saudi, but like 25% of this fund is going to go to Europe as well.

• 24:06Speaker 02

  Yeah.

• 24:07Kirsten Korosec?

  Which is interesting to me. Do you have any sense of what the focus is in Europe? Because that could, you know, a sector or specific countries within it that they're particularly interested in.

• 24:18Speaker 02

  I'm biased because I cover defense tech, but there has been a defense tech boom in Europe as well. Helsing AI is kind of like Europe's Anduril. They actually, General Catalyst, invest in them and that is kind of like their main defense tech company. So maybe. Defense tech?

• 24:33Kirsten Korosec?

  That's interesting to me because I don't really, when I think defense tech or any dual-use startup, I always just think of the US, US government, DOD. I don't think of Europe really at all.

• 24:41Speaker 02

  It's been hard for US firms to get, or US companies, to get defense deals in Europe. They definitely prioritize Europe-based companies.

• 24:49Speaker 00

  I would, I would say if I was investing billions of dollars in the European ecosystem, I would go after some.

• 24:54Kirsten Korosec?

  As one does.

• 24:55Speaker 00

  You know, just be like, hmm. I would definitely go, I'm biased of course too, but like, I think that there's going to be a big focus on sovereign space assets. Like, every country is going to want their own privately organized, or, you know, not necessarily private, but like, related to them. They're going to have a France constellation, you're going to have a German constellation, and everybody's going to be able to afford it. And a company that provides that service, you're like, hey, I'm the Starlink for sovereigns, which is probably just going to be Starlink, let's be honest, but like, that kind of thing. Like, if you said, I'm the Starlink for sovereigns, and we're going to launch your own government or, you know, semi-government constellations, that would be a huge, huge, huge growth business over the next 10, 15 years.

• 25:37Speaker 02

  Not to bring everything back to the Middle East, which is a region I read a lot about, but I've heard of a lot of space companies being flown out by UAE and Saudi for that reason, or they're like, the deals aren't necessarily that they're going to invest in their rounds, but the deals are that they're going to pay to set up a big factory there, pay to set up a headquarters, and the deal is that they then can kind of say they have a sovereign space force that they can call on when, when they need.

• 26:04Kirsten Korosec?

  Interesting. Also, when I think of like dual-use in Europe, I think a lot about energy, not just climate resilience, but like, energy resilience in terms of not relying on, for example, natural gas from Russia and like, energy independence. And so I wonder if any money will go to that sector as well. I'll be kind of keeping an eye on that.

• 26:24Speaker 02

  Yeah.

• 26:25Kirsten Korosec?

  I agree, hopefully.

• 26:26Speaker 00

  Yeah, for sure. Yeah, for the last couple of years, there has to be a huge transformation going on in what people are willing to commit hundreds of millions of dollars or billions to. And obviously, they want to get in on that at the ground floor.

• 26:37Kirsten Korosec?

  Before we leave, I'm just curious what you all will be focused on today and tomorrow at Disrupt that you're most excited about.

• 26:46Speaker 00

  Well, tomorrow, I'm going to be talking with Arvind for the CEO of Perplexity, and that should be an interesting conversation because I think we have diametrically opposed views on like 100% of all topics. He's also, I think, he's a very smart guy, a very savvy business person. But I think that, you know, it's going to be an interesting conversation, or at least I hope it's interesting. It'll be interesting to me. I hope you all will show up and find it interesting as well. For him, it might be unpleasant.

• 27:10Kirsten Korosec?

  Nice. An unpleasant spicy conversation, hopefully, for everyone. No, just kidding. Just for him. What about you?

• 27:17Speaker 02

  I'm doing the pitch showcase for fintech.

• 27:20Kirsten Korosec?

  Oh, it's so fun.

• 27:20Speaker 02

  Yes, I'm a judge for pitches, and I've already told my co-judge that I'm going to be the like bad cop. I'm going to just berate them and be very cruel.

• 27:28Kirsten Korosec?

  Cool. Can't wait.

• 27:30Speaker 00

  That's just, if you guys, if you haven't been to the showcase, it's just downstairs in the sort of like back left corner. I did it yesterday. It's really fun. Very like fast-paced and very, ours was so positive. Everything we'd like health tech and biotech, it was all like, we're saving lives, we're helping, we're making things better. I was like, God, all these startups are actually really cool.

• 27:47Kirsten Korosec?

  They're trying to make the world a better place.

• 27:48Speaker 00

  Some, some are, yes.

• 27:51Kirsten Korosec?

  Well, I'm going to be focused on the interview today with Mary Barra, GM, CEO, and Chairman, our Managing Editor, Matt Rosoff, is going to be doing that interview. And of course, we'll be covering that. And I'm really interested to hear what she has to say because she's been here for a decade in this position. Fortune has put her as most powerful woman this year, and she's always been in like the top five. And here we are, like, what is her legacy going to be? And she's been really pushing for, you know, software, all EVs, although they've backtracked on that, and autonomous vehicles through their purchase of Cruise, which hasn't gone quite as smooth as expected. So, you know, how does she navigate that? And what does she want her legacy to be? I'm hoping she answers that question.

• 28:33Speaker 00

  Well, let's hope Matt asks those questions.

• 28:35Kirsten Korosec?

  Let's hope. Matt, I sent him notes, so let's see. Thanks for being my guinea pig. And thank you for listening to the Equity Pod. You can always find us on X and friends.

• 28:46Speaker 00

  Thank you.

• 28:46Kirsten Korosec?

  Thanks, guys.

• 28:49Speaker 03

  Equity is produced by Teresa Loconsolo with editing by Kel. Bryce Durbin is our illustrator and we'd like to give a big thanks to our audience development team and Henry Pickavet, who manages TechCrunch Audio Products. Thanks so much for listening and we'll talk to you next time.