#1268 Praying for Exits on Investing in Space, AI, and Defense Tech

Praying for Exits is a pseudonymous account that is run by one of the most interesting early stage investors in venture capital. In this conversation, we talk about aerospace, artificial intelligence, defense technology, current state of venture capital, media, and why being pseudonymous is so advantageous for this specific investor. ======================= Base is making it their mission to bring a billion people onchain. But what exactly is Base? It's an Ethereum L2 offering a seamless experience for both builders and users. With near-zero gas fees and rapid transaction speeds, Base is shaping the future of the onchain world. Base is a canvas for everyone, with hundreds of apps in the Base ecosystem, whether you're an emerging creator, a seasoned developer, or someone exploring the onchain space for the first time, Base is designed to bring your ideas to life. So, if you're looking for a platform where the future of onchain is being built daily, Base is your destination. Join in and make onchain the next online. Learn more at ⁠⁠base.org⁠⁠ and follow along on Twitter at @BuildOnBase to see cool things to do onchain, everyday. ======================= Auradine, a leader in web infrastructure solutions including blockchain, AI, and privacy, has unveiled the world's first 4nm Bitcoin mining systems, featuring breakthrough EnergyTune™ technology, setting new standards in performance and energy efficiency. The Teraflux™ product line from Auradine offers best-in-class performance, efficiency, and total cost of ownership (TCO), positioning it as the optimal choice for Bitcoin mining needs. With EnergyTune™, a patent-pending technology, Auradine's Teraflux™ systems enable rapid demand response and optimal energy usage, fostering a symbiotic relationship with electrical grids, and contributing to sustainable energy practices. Designed and manufactured in the US, Auradine's Teraflux™ product line not only ensures cutting-edge technology but also mitigates supply chain risks and provides increased supply chain resiliency. Visit ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠www.auradine.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ for more information the Teraflux bitcoin mining systems. ======================= Pomp writes a daily letter to over 250,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/

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

• 0:02Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Today's episode is with Praying for Exits, a pseudonymous account that is run by one of the most interesting early-stage investors in venture capital. In this conversation, we talk about aerospace. We talk about artificial intelligence, and we talk about defense tech. We also cover the current state of venture capital,

• 0:47Anthony Pompliano?

  media, and why being pseudonymous is so advantageous for this specific investor. I enjoy doing these episodes with people who take a different approach, and pseudonymity in venture capital is something that is highly under discussed. Praying for Exits continues to build a great portfolio, and founders are seeking them out, looking for them to invest in their business. So this episode will break down why. Here is my conversation with Praying for Exits.

• 1:13Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 1:37Anthony Pompliano?

  Today's episode is brought to you by Base. Base is making it their mission to bring a billion people on-chain. What exactly is Base? It's a layer-two offering, a seamless experience for both builders and users. With near-zero gas fees and rapid transaction speeds, Base is shaping the future of the on-chain world. Base is a canvas for everyone with hundreds of apps in the ecosystem, whether you're an emerging creator, a seasoned developer, or someone exploring the on-chain space for the first time. Base is designed to bring your ideas to life. So if you're looking for a platform where the future of on-chain is being built daily, Base is your destination. Join in and make on-chain the next online. Learn more at base.org, or follow along on Twitter at BuildOnBase.

• 2:20Anthony Pompliano?

  Again, that's at BuildOnBase, to see cool things to do on-chain every single day.

• 2:27Anthony Pompliano?

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• 3:11Anthony Pompliano?

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• 3:40Anthony Pompliano?

  All right, guys. Bang, bang. I have praying for exits. Yes, it's not his real name, but he is one of probably the most interesting early-stage investors in tech right now. We're going to do a little round robin. I figured I'd just throw out a couple of industries and we could talk about what you're excited about, what opportunities you're seeing, and then maybe companies you're not seeing, but you wish that someone would go and start. We can start with defense technology. Obviously, Anduril is kind of the gorilla in the room. People have gotten very, very, very excited about what they're doing. But defense tech is not just Anduril. There's tons of other companies. What are you excited about in that space?

• 4:12Speaker 02

  Yeah, I think that like, and again, thanks for having me, Paul. I think that what's really exciting is, and I guess like it's kind of a fine line here, but you know, the macro picture has kind of shown that defense technologies are increasingly becoming more important in maybe our day-to-day lives in a way that most people in the Valley probably didn't think that they would 20 years ago. And I think what's really interesting is There was sort of a lot of brave people like Palmer, the guys at Shield AI, who kind of like pushed the envelope on, you know, developing defense technologies. And for all intents and purposes, you know, this is what Silicon Valley was built on. You know, you have Lockheed and Raytheon and all of these early Silicon Valley companies,

• 4:54Speaker 02

  taking all of the best talent out of the valley and building interesting things. I think we're coming back to a place where that's reaching prominence again. I think the shift away from, you know, defense technologies being sort of like a bad word in the valley to a place where some of the most innovative and interesting people are spending their time has been one that has been really quick. And I think the backdrop of the macroeconomic picture has kind of sped that up. And so what I'm seeing that's really interesting right now is obviously there's a bunch of offensive and defensive technologies that are super interesting and that have becoming, you know, a lot more pushed to more sort of the center of the cultural zeitgeist, as it were, through people like Palmer. But what you're starting to see is a lot of these ancillary technologies that are supportive of some of these like larger companies like Andro.

• 5:38Speaker 02

  There's one company that I just did that's, you know, like infrastructure supporting defense. There's another one that I'm doing that's building a new drone platform. There's another guy that has become quite popular on Twitter, who's thinking about using weather as a weapon. I think that there's all of these really interesting young kids who are leaning into defense as an interesting industry. And it seems really exciting. There's a lot of innovation and there's a lot of new things popping up and it's a really interesting place to play.

• 6:11Anthony Pompliano?

  So defense is one of these interesting industries where you've got to understand kind of what is our current capabilities? What is the threats that we may face, offensive and defensive, you know, kind of capabilities? And then also, how likely is it that one of these crazy technologies can actually be built? Right? And so if you take Andro as an example, they're basically like, hey, we're just gonna build cool shit. Right? It was kind of like an initial pitch that's gonna go solving some of these problems. Now, you look at the team and you've got some of the best technologists of the last few decades. And so it's like, okay, high odds for probability that they're gonna be successful. When you start looking at like using weather as a weapon, which I'm pretty sure I know exactly which company you're talking about, it makes sense that, okay, if you could do A, B, and C, then yes, you will be able to have this new capability. How do you underwrite?

• 6:55Anthony Pompliano?

  Can this group of people actually pull it off? And what is the technical feasibility of a said technology?

• 7:02Speaker 02

  Yeah, I think what's interesting about defense is you kind of have to underwrite it in two different ways at once and try and get a clear picture off the back of that. I think the first way that you have to underwrite is to your point, is this technology viable? Is the person who's building this technology, the person who can kind of get this to scale and make it useful within the context of uh the government and private enterprise? And then the other aspect of it that is like a lot more difficult to underwrite, and I think historically has kept people from investing in defense more, is how do you underwrite the likelihood that the US government plays ball, right? Um, and I think that one of the, you know, it's never really a place that you want to be in, in sort of like investing is, you know, is the US government on my side with this one?

• 7:40Speaker 02

  Um, but increasingly, I think that it's important, at least for people, or I think that it's underrated, uh, like an underrated endeavor in trying to understand this better in, in people who just start out with defense. And that they don't really have a good sense of how the government machine works, how contracts are, you know, won and, and, and lost. Um, you know, how lobbying works, uh, how all of these different things affect, um, the outcomes of your investments. And I think that people like, uh, Palmer and, and, uh, somebody like Joe Longsdale at Palantir, uh, these guys kind of kick the door down and kind of set the, um, sort of framework for how to do it. And so I think that now more than ever, it's a little bit easier to underwrite, you know, something like how does weather work in a weapon system?

• 8:24Speaker 02

  Uh, just because, you know, those frameworks were established by companies like Palantir and Endrill.

• 8:30Speaker 02

  But over time, um, I think that this becomes a lot easier to understand. Whereas right now, it's still a little bit obtuse, and I think that there's still value there in understanding what works and what doesn't in that context.

• 8:43Anthony Pompliano?

  On defense tech, it also seems like there's two other components that are driving, you know, kind of a huge influx of, uh, successful companies. One is like tech figured out how to settle the government, and now that's like a playbook and people kind of understand how to do it. And then two is, uh, there is like, uh, I think people are calling it the Palantir pack, right? There's like people who went, they're part of a successful company, they start to spin out and start more companies. And so like success begets more success. Some of that is talent, some of that is the network that gets both, so you have people to recruit. Some of that is the playbooks. Talk a little bit as to like how you start to really understand like, okay, is this a two, three decades long trend that we're about to see here that really kicks off? Because some of those people kicked down the door, now there are kind of playbooks and networks that are, that are established?

• 9:26Speaker 02

  Yeah, I think I think you see it in in kind of different industries with sort of high bars to disinter- dis- disintermediation. I think the early great first example of it is sort of PayPal. Um, you know, financial services were these sort of Byzantine, very difficult uh process. Um, that. Uh, you know, had a high bar to entry back when Peter and those guys tried to do it and um. I think that, you know, defense is now this new one where um sort of the bar has been quite hot, like been raised quite high. Uh, or was quite high originally and now, you know, to your point, the doors have been broken down a little. And what you're starting to see, especially in Los Angeles, I think.

• 10:07Speaker 02

  Um, you know, in in South Bay, there's a Cambrian explosion of uh people who used to work at the large defense companies. So whether it's Andoril or, you know, not saying SpaceX is a defense company, but aerospace defense, you know. They kind of exist within um this paradigm of like a new company that's sort of breaking things and and sort of paving the way. Um, and then they see all of these interesting pockets of value that other people from the outside looking in might not see. And then they tend to start companies around them. And so, um, yeah, there's like, uh, for instance, there's a really popular deal uh that was just done uh not too long ago. That's focuses on wire harnessing, which is running wire cables through all all the hard tech.

• 10:47Speaker 02

  Um, you know, that's that's happening out here. And so, yeah, I think there's a Cambrian explosion of of interesting things happening in Los Angeles specifically. For to that point that you made, which is, um, you know, these companies have great uh employees that work there early. Find these pockets of value that nobody are really thinking about, leave and and start new companies. And you're starting to see that at Andoril, you're starting to see that at SpaceX. You know, people who've been there for five, 10 years, vested all their equity now have this, you know, new idea that they want to pursue. And and they're going out to start a company around it and, you know, uh, it's one of the hottest sort of sectors in our in our market that we play in. And, you know, there's a a bunch of like really young sort of sub thirty year old kids who are building really interesting things right now through that context.

• 11:28Anthony Pompliano?

  Let's talk aerospace as a second industry. There is some overlap with defense, obviously, but there is a whole sector of it that has nothing to do with defense. What are you seeing in the aerospace industry that's exciting or areas of opportunity?

• 11:40Speaker 02

  Yeah, some investor in companies like Varda, you know, do some work with SpaceX guys. I think that, again, I think that aerospace is a little bit earlier along the defense curve, or a little bit, or a little bit less developed than the defense curve right now. And why I say that is, you know, there's a ton of satellite companies coming out, satellite bus companies, people like Varda who are doing interesting things in low orbit space. I think that in the way that defense wasn't necessarily clearly established on like, what are the platforms that have scalability over the long term? I think aerospace is kind of reaching that moment right now. You've seen a bunch of companies that have raised large amounts of money to, you know, launch low, like satellite buses or do these things. To me, it's very difficult

• 12:25Speaker 02

  to tell which of these platforms ends up with high scalability, because a lot of these things, like Varda, for instance, Varda is making factories in low orbit space, you know, like the total addressable market for that is probably quite large, but I think that that market is probably pretty uneducated on, you know, how to utilize that technology to its max potential. And so I think that we're still in the learning curve section of aerospace specifically, where, you know, a bunch of people are trying things, they're raising a bunch of money around it, sending things into the space and, you know, or doing things like MACH, or like, you know, doing electric planes, all these different things. And I think it remains to be seen which

• 13:04Speaker 02

  one of these is the sort of paradigm that really becomes valuable from a monetary standpoint. But I think that there's a bunch of really interesting people trying a bunch of really interesting things in that space as well. And the overlap between defense and aerospace seems to be tightening quite a bit, or at least returning to where it used to be back in the, you know, like Howard Hughes kind of days. And so, yeah, I think there's a really, a bunch of really interesting stuff happening there right now, and it's a place I spend quite a bit of time.

• 13:34Anthony Pompliano?

  When you look at the aerospace industry, it seems like there's a technology component. I think of like Boom, Supersonic, and some of these companies that are really trying to push what is possible. I think Vart is in that category, et cetera. There's also a layer of like regulation that seems to be a little bit more onerous than maybe some of these other industries, maybe even more so than like the defense industry. How do you think through a team and kind of the dynamics of like, hey, we need some technologists. We need obviously people who can kind of manage and do operations. Do we need people in the beginning who know how to work around regulation and kind of interact with these regulatory bodies? Or is that something maybe investors could help with and, you know, make it a little bit easier for some of these teams as they're really focused on kind of going from zero to one on the technology side?

• 14:19Speaker 02

  Yeah, I think it, I think that it either has to be somebody on the team or an investor. I think that in the same way that you have to build something from the ground up very intentionally in any industry. Aerospace is one where you have to do that with a special, a special amount of care. I think that to your point, people like the FAA and some of these other three-letter industries are, you know, very difficult to deal with, and I think that they're extremely difficult to deal with retroactively. Unless you're building proactively towards a place where you know that they'll play ball. I think that you run the risk of basically gambling on whether or not something will work. Well, not even from a technical standpoint, and this kind of goes back to understanding both technical and sort of,

• 15:04Speaker 02

  just sort of like government feasibility. I think that, you know, I think that you have to start building from the point of view of like, hey, I know exactly what is going to work, or at least have a high confidence interval of what these people are going to be willing to see. And if you don't sort of build it from the ground up in that way, I think that you run the risk of, you know, two years down the line, you have a Technology that's technically viable, um, but not practically viable. And so, um, I've seen a lot of companies raise a bunch of money and build the beautiful, technically beautiful things. Um, but then they get to the point where they have to sell it to somebody and, um, you know, it's for one reason or another, um, you know, blocked or pushed down or,

• 15:45Speaker 02

  you know, slowed down, um, and, and that can be kind of like a death knell for, for an early stage company. And so I always recommend to just build with the intention of like, hey, we are interactive with, you know, these regulatory bodies from the very beginning, um, even at the pre-seed. And so you have to build the company in that way so that, you know, two years down the line, you don't have to sort of reverse engineer how to make something successful instead of, you know, building it, building towards it.

• 16:12Anthony Pompliano?

  That makes sense. Artificial intelligence, another industry that seems to be getting tons and tons of interest right now. Uh, one camp is artificial intelligence is going to change the world. It's the most disruptive technology since the internet. Uh, another camp is like, you guys are all idiots and this is the most overhyped, overblown thing in the history of technology. Uh, where do you kind of fall on this and, and how do you tell? Maybe both are true and you gotta sift through, through the noise to, to find the companies that aren't going to be overhyped and will actually create value.

• 16:40Speaker 02

  Yeah, I think that I'm not like an absolutist in, in that way. I think a lot of people on the internet seem to be though, in the sense that, um, you know, most people either think that this will be the greatest thing that's ever happened to us in our lifetimes. Or, um, it's kind of this overhyped space that may be like akin to, you know, like how people talk about a crypto or, um, to me, it seems a lot more like, and, and I have nothing wrong with crypto. I think it was a paradigmatic change. I just think that it got kind of overrun by sort of people who, you know, didn't have the best interests of the platform as at heart. Um, but I think that, um, it's, it's this, it's clearly a paradigmatic shift that's going to change a lot of the way that,

• 17:19Speaker 02

  um, people, you know, conduct business. I don't know. I think that like the application layer is what's most interesting to me, but it also seems the most scary because anything that you do in the application layer seems as though it can be disintermediated by OpenAI at any point. Um, and it seems like there's been a variety of, uh, There's been a variety of companies that seem to go out of business every single day that OpenAI released a new update, like for instance, two or three days, maybe earlier this week. Um, they released the PDF reader, you know, and they released OpenAI Voice. And each time they release one of these things, you know, like twenty five startups die. Um, or at least are forced to sort of aggressively pivot.

• 18:01Speaker 02

  And so to me, I think that like, you know, the model at the model layer, it's going to accrue to like a couple of large players. In my opinion, it's just very tough to keep up to their, you know, GPU capacity, their talent levels, their ability to hire. That seems like a pretty strong moats, um, at least on the model, uh, on the model side. Uh, but I think at the application layer, um, there's a lot of things that we're probably not even thinking about that are going to increasingly be useful. Whether it's on the generative side, whether it's on the L L M side. And so to me, what becomes interesting is like, it seems like another app store kind of moment where it's like, it's very clear. The app store is going to usher in, you know, a new paradigm of like value. Um, but what are the apps on the app store that end up working? What are the Airbnbs? What are the, um, Ubers, et cetera?

• 18:46Speaker 02

  And so I think that right now we're in the very early innings of like figuring out what are the next great quote unquote apps built on? You know, the, the platform of, of AI.

• 18:57Anthony Pompliano?

  How do you think about where value ends up accruing, right? Obviously there are, uh, these very large companies that seem to jump right in. I think Adobe was like a perfect example. Uh, generative AI comes out, all of a sudden there's like twenty thousand startups who are all like, oh, my God, we can do generative AI and photos. And here's my twist on this. Um, some investors poured capital into these companies. Other investors were like, ah, I don't know. Adobe comes out and they're like, well, we have distribution and we already have a great business. And now we're going to take these same technologies and we're going to roll it out. In those scenarios, there's a lot of people who are like, oh, Adobe just killed, you know, I don't know, hundreds of startups. Uh, we recently saw this with, uh, Chat G P T and OpenAI and they launched the PDF, uh, kind of the ability to, to communicate back and forth.

• 19:39Anthony Pompliano?

  I saw one of the founders talking about, well, actually he's not going to kill our business because we have all these, you know, unique features. When you're investing, how do you understand opportunities, but try to depict? Do the big guys come in and crush these, you know, smaller companies by just flipping on these features? Or can these smaller companies use the same technology, create actual moats? And in the early days, looking at a pitch deck, you're having a conversation like there's not much to evaluate. And so what's your process to unpack that?

• 20:08Speaker 02

  So I think that like my personal perspective is that um at the model layer, it's probably the winner is probably going to be a small group of people. It's going to be OpenAI, it's going to be maybe Anthropic. It's going to be like these large companies that have raised a ton of money and have a ton of GPU capacity to basically build the best and build and train the best models. I think and I think that that's more of a zero sum game than most people think. I think that it's going to be very difficult to compete with somebody like an OpenAI on that just at scale. Um, and so where I think it becomes interesting is like building on top of these platforms. And where I think the moat uh becomes useful is like um, what's a good example of a company that has a great mode? Maybe like Midjourney, right?

• 20:52Speaker 02

  Um, it's like Midjourney is built on top of a bunch of models. I actually don't have the specific models that it's built on top of, but it's clearly like an application level um sort of thing that is becomes super useful to people. And I think that even though something like OpenAI comes out with something like a Dolly 3, um, which is is very, very interesting, very useful. I think people still tend to lean to Midjourney because um, you know, whether they like that specific art style or whether they uh find the process to use Midjourney, you know, super useful and they can prompt the models in a in a in a way that feels natural. I think that there's going to be a lot for uh consumer usability.

• 21:34Speaker 02

  Um, and so I think that people who can sort of like skin these models in a way that, you know, my grandmother could use, for instance. Um, like to me, that becomes like very interesting and creating like a bunch of uh different sort of application level technologies that um just make the average person a little bit more useful with these technologies seems to be the initial note that becomes interesting. I think it's very hard to compete and say, hey, we will train the best models with the most parameters with the but like, I think that that is is a losing game that probably the big guys will continue to win. And I think that it becomes interesting. What becomes interesting is not trying to build the next App Store, but really trying to build, you know, the next uh Robin Hood or whatever.

• 22:18Anthony Pompliano?

  Let's talk about the state of venture capital today. You're very focused on the earliest stages. How do you think about check sizes and valuations where we are at the moment?

• 22:29Speaker 02

  Yeah, what's interesting, and I'm sure that you've seen this as well, and feel free to chime in on your own like views on this, but I think that what you're starting to see is seed is becoming quite a lot more competitive. And I think that it's because a lot of these later-stage funds have realized that, you know, it's, it's pretty hard to do an A, it's almost impossible to do a B, and then anything at growth is like, you have to be really, really careful, you're probably putting a bunch of structure in it. You're, you know, protecting your downside risk, all these things. And so it seems like the late, mid to late-stage game has dried up quite a bit. And you see a bunch of these firms, you know, like $80 billion AUM firms now trying to be competitive at seed, which is kind of like a new development.

• 23:11Speaker 02

  And so obviously you're seeing seed valuations push down, you're seeing sort of later-stage valuations normalize a bit. And so it feels like there's, you know, a war zone kind of happening at seed. It feels like every single person is chasing every single hot deal. The biggest funds in the world are spending their time on $2 million checks. You know, it's, it seems super, super hyper-competitive at seed right now. And I think that's trickling down even into pre-seed. Pre-seed seems to be a lot more, getting a lot more institutionalized. Before it was a bit of the sort of Wild, Wild West, people were just kind of, you know, doing what they, were just kind of like firing off checks with valuations that were just kind of like done back of the napkin math.

• 23:53Speaker 02

  And now it's a lot more, it seems a lot more structured and like a lot more people participating in a formulated way. So I think that I spend most of my time at pre-seed and seed and yeah, it feels like to really win the best deals, you have to be very articulate and about real value that you can provide rather than, hey, I'm a seed investor and there's not many of us, so you better take my money until you wait for the bigger guys to come along.

• 24:18Anthony Pompliano?

  When there is this more competition, I think it just forces people earlier and earlier. And one of the things that has been happening simultaneously is that there are more and more individuals who can now write checks similar to what we would have historically called a super angel. And you almost get this kind of weird dynamic where you have individuals who have become the sizes of small seed institutions and they're able to write checks at the size and velocity at those institutions. So it begs the question, who ends up winning on brand, right? The individuals versus the actual institutions themselves. You operate under a pseudonym and so you almost are living kind of in this like third bucket. How do you just think about, okay, somebody's starting a company. It's obvious that there's a higher probability of success.

• 25:02Anthony Pompliano?

  It's not about picking, it's all about access. What are the pros and cons of the individual versus institution versus maybe this like pseudonym, which kind of blends the two?

• 25:10Speaker 02

  Yeah, I think that's a great question. I think that what you're increasingly finding is the most discerning founders, even at the institution level, are still pursuing specific people in those institutions. And so it's not like, hey, I want just Sequoia, but it's, hey, I want Sean Maguire at Sequoia. Because Sean, you know, worked at DARPA, has all these connections, you know? I think that increasingly the advice that you're seeing these young kids get from people who've done it a few times before is, hey, make sure that the person within the institution that you want is the person that is going to be leading this deal and doing this deal. And I think that with that in mind, the individual is kind of prioritized in a lot of ways, even if they have the platform of a large institution behind them.

• 25:55Speaker 02

  And so to me, what's great about being pseudonymous is the reason that I've done the pseudonymity thing for so long is because to me, it allows the only surface area for anybody to interact with to be my ideas or previous work that I've done. That is knowledgeable through the lens of the pseudonymity. And so. Um. What I recently find is like, uh, to win the best seed deals, you have to be very, very clear on and articulate on what the value that you are providing to these founders are at a granular level. And it's not like these kind of like pie in the sky. Oh, later on down the line when you're at Series A, I'm gonna help you raise. No, it's like very, very practical needs that are like immediate.

• 26:36Speaker 02

  Um, and so I think that the feedback loop for like, who are good seed investors that provide value? Uh, whether it be HR, whether it be, you know, any of these other things, the feedback loop is much tighter um than it used to be. It would used to be you invested in something in seed and you had like two years to before the A to like kind of prove your worth as a seed investor. Now it's like, um, hey, great. We took, you wired last week, um, let's start grinding kind of thing. Um, and so to me, uh, being a student anonymous has allowed me to really just focus on the work. And less so on like, hey, look at me. I went to this school. I did these deals back in a previous job or whatever. To me, that's all kind of like stupid and irrelevant. Um, it's, it's, you're really only as good as your last deal that you've done, in my opinion.

• 27:21Speaker 02

  And so, um, yeah, I think that being pseudonymous allows, A, and one thing that it also does is it allows me to play in a place that is like, uh, uniquely kind of like, um, you know, friends with everybody, enemies with nobody. Um, and so, I think that that's really helpful at seed, um, just because there's so much to see. And so having a good network of people to parse, you know, at least the first level of things for you is, is really helpful too. And so, yeah, I think that, you know, my perspective is that even at the institutional level, the individual and what the individual value that that person can provide is, is the most useful thing in winning seed deals. And if you can't articulate what that is, you probably aren't offering enough, so.

• 28:02Anthony Pompliano?

  What, what, what is the thing that you, you know, uh, present in terms of the value proposition initially?

• 28:07Speaker 02

  The thing that I present in the value proposition initially, and I think that this is something that you're quite good at as well, is like, I kind of frame it as like, hey, I work with a bunch of really technical people who build incredibly, incredibly technical things. I'm not the most technical person myself, but what I am very good at doing is capturing and retaining attention. And I think that there's a few useful pillars where attention has become sort of like increasingly a valuable sort of currency in, in the world that we operate in. One is obviously like hiring, right? So it's like, hey, we have a really interesting company. We have a great mission. We've been well capitalized. Why do you want to come work here? How do we capture the attention of the best engineers or the best uh hard tech guys or whatever?

• 28:48Speaker 02

  Uh to basically come in and work here, uh leave their jobs elsewhere to come and like, believe in the equity that they'd be getting as opposed to, you know, the salary that they'd be getting. So that's one is like, how do you capture the attention of AR like? In from an HR perspective. Two is um how do you capture and retain the attention of investors, right? It's like, how do you build sort of like this pedigree around yourself so that by the time that you go out and raise, you're around and basically already accounted for as opposed to you sort of going and kicking the tires on a bunch of firms and taking six months of a process to basically see if people are even interested. Um that's the other side of it. And then the third side of it is like, how do you just get attention on the things that you've built?

• 29:28Speaker 02

  I work with a bunch of people who are like extremely technically proficient, but when it comes to getting people to care about this beautiful thing that they've built, it's not their core competency. Um and so finding unique and interesting ways to leverage the distribution mechanism of the internet and, you know, uh all of these different social platforms that increasingly playing uh an important role in the lives of venture capitalists and founders. Like, how do you just get people to say, holy shit, this guy's building something incredible? I can't wait for it to come out and or uh I can't wait for, you know, this to launch. Um I think that that becomes like a really useful thing. And it doesn't seem like there are many groups, there are some and I respect them all quite a lot, but there aren't that many groups that focus on this specific segment of it all, which is,

• 30:12Speaker 02

  you know, like go to market and, and, and in kind of a different sort of way. And so um the value proposition that I provide is like, hey, let's capture as much attention as possible for you and modulate it into the most useful function of it um to, to get your business to where it needs to go.

• 30:28Anthony Pompliano?

  Talk a little bit about why the media landscape allows you to do this today, right? Like, it used to be that you would have to go on television or talk to a newspaper reporter. You, for all intents and purposes, in the most loving way, you shitpost on Twitter and are very good at it and are able to, you know, capture attention and drive people to take action. What is it that is different today than maybe five or six years ago that has allowed for an opportunity to someone like you to kind of slip in and now provide this value to founders?

• 30:57Speaker 02

  Yeah, I think it's, I think it's anybody who has a voice on the internet probably notices this is that like mainstream media has become increasingly less useful. It's become increasingly obvious that, you know, there's an agenda behind most things that are shared by mainstream media. And I think this kind of goes back to something we touched on earlier, which is like the individual versus the institution. I think people are increasingly more willing to believe the individual because the levers behind why an individual does something is probably a little bit more obvious than the levers of why, like, a larger media institution might do something. So to say that you like, understand, you know, like what the purpose of a New York Times article is, like where, what, what, you know, like the, the editors and what the

• 31:42Speaker 02

  different people within the New York Times were all trying to accomplish by getting this across, that's a lot more to us than saying like, who is this guy? Or what is this person? What do they believe in? And how does that tie into my own personal beliefs? Obviously, it's not a perfect science and people can kind of like present themselves in whatever they want. But I think that like, social media, Twitter and Instagram, these things specifically, have kind of given people a distribution mechanism to have them, have them understood in a way. And so, you know, when you're spending all day on X.com and you're providing context about a bunch of different topics, I think it allows people to paint the picture of you

• 32:23Speaker 02

  that's a little bit more easy to understand and maybe honest than you would get from like a mainstream media platform. And so that's allowed these voices to become a lot more powerful, these individualized voices to become a lot more powerful than they used to be. And I'm sure that you've noticed Two, like how many times you've created value for yourself just by expressing your opinion on one of your various platforms. I'm sure that, you know, what you found is that it magnetizes the kinds of people that you want towards you. Because you find people who see things the same way as you do, or can at least, um, you know, combat the way you think in a way that seems valuable to you over the long term, right? And so, yeah, I think that having the, having a strong individualized voice in this landscape, um, becomes this really useful and functional tool.

• 33:08Anthony Pompliano?

  What's interesting about it is, uh, most people think when they're running a business, hey, I should not say anything that will offend someone. Right? And they very much want to be kind of cautious and walk on glass. Uh, what you find is the people who are the best at it, like Elon must piss off a lot of people. But he also pulls this huge magnet of talent and capital towards him. Uh, Palmer Lucky, another great example. We need to go down the line. There's a, there's a bunch of these people. And so in some weird way, I think my advice has morphed over the years from like, oh, you should try to build an audience to like, you should just say what you believe. Right? And like, if you actually believe it and are willing to say it out loud, like there's some degree of you're willing to defend that idea in public. Uh, which you will be, you'll be shocked at how many other people believe the same thing and are impressed that you said it.

• 33:53Anthony Pompliano?

  And so then they will come and they will find you, right? And it seems like that's exactly what you've been doing as well.

• 33:57Speaker 02

  And yeah, I totally, and I think that the person who like set this playbook up before anybody else, and it was like the most honest version of this is probably Peter Thiel. Um, you know, Peter has had these contrarian views for, you know, decades now, and he's never really been shy of, you know, like even when the Trump thing was going down, he was very vocal. I think that like Peter is a great framework for this because he has constantly spoken his mind. And if you look at Thiel Fellows, you look at Founder's Fund, or you look at any of the companies that are quintessentially Thielian, um. You know, they all have this kind of through line of, of, of, um, you know, just like personal and, and professional beliefs. And I think that if you can establish yourself, um, in a very strong way with that kind of voice, you know, to your point, uh, the right types of people will come.

• 34:42Speaker 02

  Or not, not the right types of people, but the people you probably want, um, coming towards your, are, are, uh, that's just a good way to attract them. So. Totally on the same page.

• 34:52Anthony Pompliano?

  If we were to take that framework that he has in terms of his personal beliefs, he also has turned that into very contrarian bets in terms of investments themselves. How do you think about consensus versus contrarian when it comes to early-stage investing? In one regard, you maybe want to do something different and be right very early on. But the whole, you know, framework of asymmetry is that eventually the contrarian thing has to become consensus, because that's where the value ends up coming. So how do you kind of think about, you know, hey, I want to do something that is different and find these outsized returns, but also it has to be something that maybe eventually gets to a consensus belief?

• 35:30Speaker 02

  Sure. Yeah, I think that you have to just have a really strong perspective on the macro and micro and be willing to take your, take like strong bets on that. To your point, like the only value that's really accrued, like to me, every time I raise a fund and deploy it, I want to raise and deploy a 10x fund, right? And there's no way to get to a 10x fund purely off consensus. You have to take these kind of outsized, weird sort of like non-obvious bets. Because if you're to only take the obvious bets, you know, the market is pretty efficient and they're probably priced pretty well. And so you're going to see much less of like this outsized return to you and your investors. And so for me, what I always try to balance is like, hey, there's a certain amount of things that I have to do that just has to make sense, like it has to fit the boxes, check the boxes.

• 36:15Speaker 02

  Because my LPs are institutions and, you know, like me doing these random one-off things is not necessarily what they put money for me, what they put money into me for. And I think that that's also a thing that like you have to be very respectful of is like, at the end of the day, if you run a fund, you are like beholden to, you know, endowments and pensions and all of these different things. And you have to respect that. You can't just like fuck all of that off with, you know, just crazy ideas. And in some instances that works, you know, but in most instances, I think that there's a fine line of balance between taking these early bets on these non-obvious people, while also being able to be somewhat clearvoyant into the future of like, hey, if they hit, if they get to zero to one and they hit X, Y, and Z milestone,

• 37:00Speaker 02

  this actually does probably become interesting for a founder's fund or this does become interesting for Sequoia or an Andreessen or whoever else. And so it's being sort of like having some level of premonition of, hey, do I think that X founder with X Y idea can basically get?

• 37:16Speaker 02

  Can basically become a little bit more consensus over time, right? And so I think that understanding what becomes more consensus over time and who does it become more consensus to becomes like a very important framework to have as a seed investor. Because you're really betting, as a seed investor, you're really betting, hey, this idea becomes more consensus to these large institutions over time. And so, and, and, and at a point like it goes from consensus to like a Sequoia to like a consensus to a Co2 to a consensus to like a T row price, right? And every step of the way, you have to understand like, hey, does this make sense for them? And so, you know, I think half of it is coming up with these new and novel ideas and trying to capture value early.

• 37:59Speaker 02

  And then the other half of it is understanding how do these ideas evolve into something that's more palatable over time to larger audience.

• 38:07Anthony Pompliano?

  When you see these consensus, or I'm sorry, the contrarian ideas, they are usually started by people who wouldn't pass a normal job interview. How do you, how do you kind of separate out who's crazy versus no, who's just different and is necessary to build the company? And, and I say that because through the years I've met and sometimes even invested in people who had these kind of insane ideas that you're like, man, if this works, this would be highly, highly valuable. But then six months, a year, two, three years down the road, you're like, okay, but this isn't the person who's going to be actually be able to pull this off. Versus other times, it is the person who can pull it off. And, and it's one of the hardest things I think to do early on when you don't have a huge, you know, data set to kind of evaluate, how do you do it?

• 38:50Speaker 02

  The way that I do it is like, and to your point, I like to find people that are un-hireable in other places, like could never work at like an insurance company or like a law firm or whatever. Specifically because they're so obsessed with the idea that they're working on, that they just would never be able to work anywhere else. Like, for instance, we kind of touched on it a little bit earlier. You know, I have, I have a friend named Augustus Dorco, he's building a company that's supposed to like be a platform for weather and modulate weather in a bunch of really interesting ways. You talk to Augustus and you talk, you see how passionate he is about things like rain and things like hurricanes. And you realize like, this, the, there's nothing else for this guy, you know what I mean? Like, there's no other thing that this guy could do. This is kind of like.

• 39:34Speaker 02

  This is it, you know, if this doesn't work for him, like it's, you know, I don't know what happens next because he's so passionate, he has so much knowledge. And I don't know where, it's you, you kind of like, look at these people who are like, oh, you're clearly taking it all in bet on this. Like, everything that you're teaching yourself, your network that you're building, you know, the things that you spend your day to day on are clearly oriented in such a specific way. That it's like, there's no like plan B. It's literally just you are doing this, and if you're not doing this, you're finding a completely new planet, you know? Like, you're scrapping everything that you have going for you and like really literally starting all over. And so I think that I love those people who seem all in on ideas, who are like,

• 40:14Speaker 02

  yo, if this doesn't work, I have no idea what else I have left for me. There's no like, I just end up at a law firm somewhere doing like corporate law or whatever. It's like, you know, either this is going to work, or I'm back on my buddy's couch figuring out the next idea. And I really like people who are all in like that. And I think that if you really have sort of an outsized idea that you want to run with, you kind of have to operate in that way. Otherwise, you know, you're hedging yourself at a time where you should be all in.

• 40:42Anthony Pompliano?

  The last question I want to ask is kind of internal, uh, when it comes to these, uh, early-stage venture capital firms. How do you think about portfolio construction? Some people want to go spread as many small checks as possible and just kind of, you know, build this massive index. Other people are like, I want to take eight to 10 bets and be highly concentrated. What's your strategy?

• 40:58Speaker 02

  I think it's probably somewhere in between. I don't love the idea of like having a bunch of, and then I think that like, if you're honest with yourself, um, at seed, and you really want to do, you really do want to be helpful to these companies, um, you have to be honest with like how much work you're actually able to do. Um, and so to me, it's like much less useful for me to do a hundred fifty K checks, um, and just sort of index the market because at the end of the day, you're, you're, you'll get a market return, you know, like there's, there'll be nothing special about your return. You'll, you'll basically just be kind of like in the median of whatever that, that return profile is, right? I think that to be really effective, especially at the seed stage, you kind of have to take bigger bets with a smaller amount of total bets.

• 41:42Speaker 02

  Um, and, and for me, that allows you to work closely with these companies in a way that you can see value, outsized value returning to you as an investor and your investors in your fund. Um, and so to me, the right number. I have a twenty million dollar fund. It will probably end up with thirty to thirty-five companies at a median check size of called six hundred to seven hundred fifty K. Um, and that'll probably be, you know, uh, where I net out and, and I think that that is enough ownership upfront where you're not getting, I mean, you probably still get crazy diluted, but at least through that dilution, you'll still end up with a healthy amount of percentage. And, um, you're not spreading yourself super thin where you're trying to help fifty companies every week, you know?

• 42:27Anthony Pompliano?

  And when you see, you know, we talked about the media stuff, but I guess like also if you're writing those size checks early on, uh, you're below the threshold where it's highly competitive. How much of the deal flow is coming inbound on Twitter versus, uh, kind of personal networks of individuals versus, uh, large institutions, you know, other, other VC firms that are kind of sending you deals?

• 42:46Speaker 02

  Yeah, I think I'm, I'm really lucky in the sense that I seem to be pretty neutral and most people, uh, find working with me totally fine. And so, uh, I, I'm lucky in the sense that, you know, and I'm sure you have this too, since you, you have quite a big platform yourself. Is I just have an email that's like latently available for founders to send me whatever. I probably get anywhere on the order of seventy-five to a hundred deals a week. Uh, maybe four to five percent of those are really interesting and worth diving in more. Um, what's also great about having a platform, as I'm sure you know, is that my, uh, the cold outreach, uh, conversion percentage is quite high, you know? I can reach out to founders and at the very least they'll be like, who the fuck is this random meme page, uh, you know, should, uh, asking about my company?

• 43:30Speaker 02

  I might as well see at the very least what's going on here. And then when you can articulate like, hey, I'm actually, I actually take this quite seriously. I'm a student of the game. I have a lot of value and, and people that I think that I could be able to provide to you. Um, you know, then it becomes a little bit more of an interesting conversation. Um, and so, yeah, I think that what's the right balance for me is working closely with a bunch of the funds in the valley who I'm very lucky to, to work with quite closely. As well as trying to find net new things so that it never seems one-sided in that exchange, right? So it's not like, oh, I'm just taking deal flow from Sequoia every single day and they get nothing back. It's, you know, I give them one thing. I send them one thing, they send me one thing and we just go back and forth until, you know,

• 44:13Speaker 02

  hopefully we've done, we've pollinated a bunch of stuff. And I'm really into being collaborative in that kind of way. I think that there are some people who are like weirdly, not weirdly, I understand where it comes from, but they're very focused on just like accruing all of this stuff to themselves. And to me, I think that, you know, over time, you are gonna have to work with these people in some capacity. So it might as well be earlier than later. Um, and build, making sure that, you know, you are sorted in a good way, uh, when that, when that time comes.

• 44:44Anthony Pompliano?

  That makes, uh, makes complete sense to me. It sounds ridiculous to ask, but where can people find you if, uh, if they want to send you deals?

• 44:50Speaker 02

  Yeah, you can just any, uh, any social media platform, you just type in praying for exits. I'm sure I'll pop up and if not, um, G, uh, P, like general partner, um, at praying for exits is another great place to reach me. I'm, I'm very active there. So, um, yeah, reach out.

• 45:06Anthony Pompliano?

  Awesome. I appreciate you doing this. Uh, I learned something which always makes these great. And, uh, I think that you are helping to pioneer a whole new model where, uh, your identity doesn't matter nearly as much as the quality of your work. And, uh, your kind of value of the pseudonym actually is, uh, driven by, uh, the word of mouth, right? You help one founder, they go tell everyone else, and then all of a sudden you became known as a super high quality, high value, uh, kind of addition to a cap table. And, uh, then there is this element of like, everyone's still a kid at heart and, you know, likes the idea of let's get the, the, uh, suit anonymous VC on, uh, on the cap table as well. Awesome. Well, all right. Thank you so much. We'll do it again in the future.

• 45:46Speaker 02

  Yes, sir. Thank you, man. I appreciate it.