Mario Gabriele - mullet capitalism & modern media empires

Mario Gabriele is the founder of The Generalist, a tech analysis substack with over 132,000 subscribers. Mario also runs Generalist Capital, which invests in early stage companies. In this episode of World of DaaS, Mario and Auren discuss: Why 70-80% of VCs destroy valueThe rise of mullet capitalismNavigating secondary sales in venture Looking for more tech, data and venture capital intel? Head to worldofdaas.com for our podcast, newsletter and events, and follow us on X @worldofdaas. ...

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

• 0:02Auren Hoffman?

  Hello, fellow data nerds. Welcome to World of DAS. I'm your host, Orin Hoffman, CEO of Incubate and GP of Flex Capital. Discover more episodes, get weekly data as a service news, original content, articles on data and more at worldofdaas.com. That's worldofdas, D-A-A-S, dot com. Hello, fellow data nerds. My guest today is Mario Gabriele. Mario is the founder of The Generalist, which is a tech analysis Substack with over 132,000 subscribers. Mario also runs Generalist Capital, which invests in early-stage companies. Mario, welcome to World of DAS.

• 0:41Speaker 01

  Thanks so much for having me.

• 0:43Auren Hoffman?

  Really excited. Now, you wrote this great article I really liked about VC soft power. How does that work right now and how is that evolving?

• 0:50Speaker 01

  Yeah, I mean, I'm sure you know this much better than I do, but sort of soft power term comes from Joseph Nye and is usually applied to sort of the political realm for discussions about power that is based on influence.

• 1:03Auren Hoffman?

  They would say Hollywood is America's soft power or something like that, right?

• 1:07Speaker 01

  Exactly.

• 1:08Auren Hoffman?

  K-pop would be Korea's soft power.

• 1:10Speaker 01

  A perfect example. And VC is such an interesting space in the sense that there was really no need for soft power when it started because there was plentiful entrepreneurs in theory and very few capitalists. But now that it's gotten so competitive, the need to have a story, a brand, has become essential. And so I think some of the things you're seeing happen at the moment is VCs taking storytelling media extremely seriously. And you can see that with the Andreasons of the world, but also smaller firms, too.

• 1:43Auren Hoffman?

  Some of them have their own news outlet even.

• 1:45Speaker 01

  Yeah, exactly. Future, the A16Z outlet didn't ultimately last, but sort of the lessons of that experiment feel like they very much were pushed into the firm in the sense that they have a bunch of different podcast shows, their partners are releasing books, the sort of narratives that they put into the market around American dynamism or it's time to build are really shaping the way that founders... And other VCs spend their time and attention and capital.

• 2:14Auren Hoffman?

  When you think of Hacker News, which was the Y combinator aggregator of news or something like that. Cause these VCs are essentially their money is not a great differentiator. Money is a commodity, so they have to differentiate in some other way. And what are the, beside for just like doing some podcasts or something? What are the other ways you see these VCs differentiating themselves?

• 2:35Speaker 01

  Just trying to do a podcast or the sort of worst possible version of it is the sort of medium blog post. I'm thrilled to announce our investment in XYZ. And that doesn't create any soft power. It almost signals the opposite. It signals sort of a lack of creativity and thinking. But I do think the best version of it is probably what A16Z does, which is constant, solid media that is thoughtful and really aimed at the audience of entrepreneurs and other investors. And then these massive sort of super stories that they're telling throughout these different ways.

• 3:08Auren Hoffman?

  Just to push back a bit, A16Z has hundreds of people in its PR department, essentially, or at least like they probably have at least a hundred, both internal and external people to help them do it. They have Mark, who's just like extremely famous person who can put things, and also brilliant person who can put things out in the ether. Most VC firms, even extremely successful VC firms, don't have anything equivalent to that. So it'd be hard to copy that thing if you're not A16Z, I would presume, right?

• 3:40Speaker 01

  Yes, there is like a genius of phrase that Mark Andreessen has that I think is extremely hard to replicate. And that can't be done super easily. But I do think you see other firms find ways of doing this interestingly. So I think what Logan Bartlett has done with Redpoint, totally different sort of sensibilities, much more playful, but has built a really thriving podcast that has built his brand and the firm's brand.

• 4:05Auren Hoffman?

  This is so interesting. I've never even heard of him before till right now. So that's great. I'm going to go check him out. I actually never heard his name before until today.

• 4:13Speaker 01

  Okay. So he had an interesting trajectory with sort of soft power in the sense that he was a very funny Twitter account for a while and sort of initially built a podcast, sort of riffing on that more humor, banter based podcast, and has now more leaned into really great interviews, things like that. It's an interesting one.

• 4:30Auren Hoffman?

  You'd also wrote about potentially this VC mass extinction event and you wrote this thing called mullet capitalist. What's going on there and what firms do you think are under the biggest threat?

• 4:40Speaker 01

  Oh, there was some interesting discussion in the summer. I think it was on the back of some data that maybe Sapphire Ventures released, or maybe it was from Carta, basically showing that since the bubble burst in 2022 and late 2021, so much of the LP capital has basically concentrated in a very, very small number of names, basically meaning that unless you are Sequoia, Founders Fund, Andreessen, whoever, it's really hard to raise capital.

• 5:05Auren Hoffman?

  Yeah, their funds are getting much bigger and other funds are suffering because of it.

• 5:09Speaker 01

  Right, exactly. And so there was a lot of discussion around, is this sort of the death or the mass culling of these insurgent managers and sort of these mid-sized managers? And that does seem to be happening. I think the folks that are most under pressure are the ones who have sort of delivered middling returns without a clear perspective. I think the need to be opinionated is probably stronger than ever.

• 5:31Auren Hoffman?

  Yeah, either you have to have great returns or you have to have extremely strong opinions about the future, right? You can't have neither of those.

• 5:40Speaker 01

  Yeah, and for a while, that was not necessarily totally mandatory. You could sort of pick a rough space and put a flag in the sand and say, this is what we're going to do. And that was promising enough. But yeah, now the dynamics are super different.

• 5:55Auren Hoffman?

  Why are there not more traditional other businesses that maybe have access to proprietary data or access to startups like getting into the investing world? I've always thought it'd be great to have plaid capital or Stripe Capital or Ramp Capital. A lot of them have that for lending where they lend to their, but they don't have it for doing equity investments.

• 6:16Speaker 01

  I'm realizing I didn't really answer some of the previous question, which was this idea of the mullet capitalist, which is a traditional business in the front and venture in the back. And so Stripe Capital or Plaid Capital, those would be like the supercharged version of that with the best possible businesses in the front and venture in the back. I think functionally, a lot of them do it. Stripe makes a ton of investments.

• 6:38Auren Hoffman?

  And certainly the founders do. Maybe they're using the data. I'm not sure.

• 6:41Speaker 01

  Yeah, I'm not sure either. I sort of suspect maybe not, but I don't know. I would guess that they feel like they have more than enough on their plate. They can do enough of this personally or through sort of associated funds. I mean, I think Zach from Plaid has sort of a second fund to the side and maybe that's the way that they feel comfortable doing it.

• 7:01Auren Hoffman?

  There was a rumor when, this is prior to LinkedIn selling to Microsoft, that Jeff Weiner would just go in and he would have the God view of LinkedIn and he would know what was going on. He would personally make, use that to make his own angel investments. And I don't know if that rumor is true or not, but there was a rumor for a while and you could imagine a lot of these companies have great data and they can use that to make really good investments.

• 7:24Speaker 01

  Wow. So you could just see Peter Thiel just connected with X or Mike Moritz just...

• 7:30Auren Hoffman?

  Yeah, you could also spy on competitors or something like that.

• 7:33Speaker 01

  Yeah, that would have been pretty amazing.

• 7:35Auren Hoffman?

  Yeah. And by the way, a lot of people do mine that data is mineable. So people mine Twitter and LinkedIn and other types of things, who's talking to who. And based on that, I want to talk to these companies. So that is going on today, but maybe not from the inside of these companies.

• 7:49Speaker 01

  Yes, totally. I had a friend, a venture capitalist friend who a few years ago, as an experiment, set up a fake LinkedIn account, X, Google, Uber, Stripe, and just waited to see how long it would take until this person, from the moment they put something new or stealth on their profile, who sort of is automatically in the DMs. And they were like, you know, it's almost instant as soon as you flip that switch.

• 8:12Auren Hoffman?

  Interesting. So they basically created a honeypot for VCs, because I've heard of companies doing that for recruiters to see what recruiters are trying to recruit into their engineers and stuff with all great, oh yeah, X, Google, graduated from MIT type of person. This is like a more advanced version to figure out what of your VC competitors and how are they pitching these people?

• 8:36Speaker 01

  Yeah, totally. Honey pot's the exact right word for it. Yeah, it was a very compelling stock photo and CV that made you think, oh, you know, this guy's going to build something fantastic.

• 8:45Auren Hoffman?

  Totally. Yeah, exactly. One of your pieces, you quoted Vinod Khosla saying that 70, 80% of VCs just add negative value, don't add zero value, but actually add takeaway value. First of all, let's unpack that. Do you believe that? Do you think that's true? And then we can talk about, okay, how they could add more value.

• 9:04Speaker 01

  Honestly, the first time I heard that, I was sort of like, that can't possibly be true. But I'm sort of embarrassed to say that the more time I spend with companies and see sort of the dynamics that they go through, the more I think that really might be true. And it's maybe not that much of an exaggeration. And I don't think it's necessarily from ill intentions. I think it's just probably a mix of people maybe overextending themselves, whether with time or their own opinions or whatever it is. But yeah, I think it is really hard to actually add value. And sometimes just doing nothing puts you ahead of a lot of folks.

• 9:37Auren Hoffman?

  I do think it is very hard. As someone who's served on boards before, and I don't like being on boards, mainly because I don't feel like I can help. Because you just don't know that much about the company. Maybe you can help on the very big thing. I assume if a company's going through a fundraising or an M and A event, or something like that, where the VC has seen this so many times, they could add a lot of value. But your company's strategy, your product strategy, it's such a snowflake. I do think it's almost unfair to expect your board to add a ton of value. I guess really what you want is them to add no value rather than negative value.

• 10:12Speaker 01

  Yes. Where would you put your number? Do you think Vinod is roughly right?

• 10:17Auren Hoffman?

  I don't know. Maybe I don't think it's that high a negative. I do think very few add real value. The few times I've been on the board, like the main thing I've been, first of all, often it's either going very well or going not well. And both because I don't know how much you can have. When it's going very well, literally, you just have these meetings, you're like, everything is great. You guys are awesome. And if it's not going well, like, it's not like you can fix it. Some of the cases I've been on the board, the main thing I'm arguing for is to give the CEO more comp. Sometimes these venture capitalists, I think they think very, it's like the CEO, oh yeah, they may have a big slung of equity, but it's already vested. So their go forward equity is often, and their go forward comp is often significantly below what it would cost to bring in an outside

• 10:59Auren Hoffman?

  CEO. By below, it might even be like 10% of what an outside CEO would be getting. And often I'd be arguing, okay, maybe it shouldn't be 100%, but should it be 80%? Should it be 70%? And so that's often, so when the closed door session after the CEO leaves, I said that the number one thing that I've done on boards is try to get more comp for my CEOs, which is a very odd thing. So I don't know if I'm really adding that much. I'm adding value to the CEO, clearly. I don't know how much value I'm adding to the company.

• 11:27Speaker 01

  Keeping them in place and motivated, I'm sure is important, right?

• 11:30Auren Hoffman?

  The argument, of course, against is they're not going to leave. Even if we didn't pay them anything, they're not going to leave. And I think, yes, that's true. But now they're going to be so much more motivated, so much more excited. Just getting that person 10% more excited, that could double our outcome.

• 11:44Speaker 01

  When you're so leveraged on that one person.

• 11:46Auren Hoffman?

  Exactly. You're so leveraged on that one person. I would say that is the area where VCs will know that. They'll know this person is so important, but then they won't try to incent that person more in any way. And so poundful, it's like giving this person, let's say, 2% more of the company. If you could double your outcome, so much better for all the shareholders. Yet the VCs are like, I'm not going to get diluted another 2%. By this person already owns, they already own 30% of the company.

• 12:13Speaker 01

  Yeah, it's like you sort of just expect them to do it for pure love of the game. And as little as you can give them as a result, yeah.

• 12:19Auren Hoffman?

  So much do, so many people do. And then they'll go off and there'll be an advisor or some other company. And then the VCs start going, why is this person going to be advised? We just told them they weren't valuable. That's been my main thing when I might have been on the boards, which is, again, I don't know how much, maybe that is adding a lot of value. You have to have humility to say like, I can't really help the company do its job.

• 12:40Speaker 01

  Yeah, just getting to a sense of deep reality with a company. It takes years and years and years on anything you're going to say. Presumably 99% of the time, the CEO has thought of it and ruled it out for XYZ reasons, right?

• 12:54Auren Hoffman?

  A lot of these VCs, they're on 15 boards. How much can you really know about any given company? It's hard.

• 13:01Speaker 01

  Yeah, that seems like it would be a really terrible way to spend a year is doing 15 boards.

• 13:08Auren Hoffman?

  Being on a board is the most boring thing.

• 13:10Speaker 01

  I've only ever been told, never do it.

• 13:13Auren Hoffman?

  It's terrible. It's so boring. It's also boring for the CEO. The process of creating on the board deck, I think, is a very good thing to go do. But often the meetings themselves, and maybe I just haven't been to great ones, including the ones I've won myself, are never been that good. I don't know that many people are getting much value out of them.

• 13:31Speaker 01

  I suspect that is very universal based on what I've heard. I doubt there's some unbelievable board meetings happening that we're missing out on, but maybe very rarely.

• 13:40Auren Hoffman?

  At Meta, they obviously have the traditional board, which is the governance board, which is obviously very important when you're a public company. It's even more important, but they also have a product board. Now, some of the board members are on both. So there are people who are on the product board and the product board is super deep on the product, doing like product reviews. And so some of the people like Drew Halston and I think Charlie Song or some of these guys who are on the Meta board are also on the product board. But that, to me, is a very interesting thing and that is quite strategic. But the people on that board are people who have deep product experience and not necessarily the governance person who you also might need on the main board.

• 14:20Speaker 01

  Yeah, it sounds like that would be a very different dynamic.

• 14:23Auren Hoffman?

  It would be interesting to talk to the CEO of Meta, but maybe Zuck gets more value out of the product board than he does get out of the traditional board of directors, which you just need to run a company.

• 14:33Speaker 01

  Yeah, presumably he gets something out of it. Otherwise, why bother, right?

• 14:36Auren Hoffman?

  Yes, exactly. I would presume he wouldn't be doing it unless he's getting personal value out of it.

• 14:40Speaker 01

  Yeah, totally.

• 14:42Auren Hoffman?

  Is there anything, if you were advising VCs to be better at adding value, what would you advise as things to do or things to not do?

• 14:49Speaker 01

  The things that I hear most from founders and that's sort of, I think, the best indication is really, they end up being very simple things. And so I think the number one request or thing that I hear from founders is just like a level of responsiveness and generosity with one's network, being really genuinely open to seeing a message, responding quickly with a tangible thing that you might be able to do and being willing to expend social capital in doing that.

• 15:17Auren Hoffman?

  I would have thought that would be something that most VCs do very well. So again, it's on the CEO to use them effectively. And I think most CEOs, including myself, are guilty of not using their investors, not asking them to do the things. But I think once asked, I would imagine most investors will do it and do it quickly.

• 15:37Speaker 01

  I think there's a version of it where if you don't know how to make the ask and if it's a really vague ask, it's sort of incumbent on the investor to try and do a little bit of searching to say, hey, we're trying to meet people who are in this sector, in this role. If you say, hey, I see you're connected to this person on LinkedIn, do you know them? Yes or no? Maybe that gets a fast reaction. But from a lot of founders, from what I hear, it's sort of like maybe that in-between style intro that doesn't get as much of a response or things like monthly updates that doesn't get often a response or much of a response. And so I think it's just a lot of those little things that can make a difference. But also, I'm very early in charting this for myself. So I'm sure there are a bunch of missteps that I'm making and that in 10 years' time, someone will say, I can't believe

• 16:21Speaker 01

  you didn't do this or that.

• 16:23Auren Hoffman?

  The negative things I've seen is just asking the CEO or asking other people in the company to do things that are, have low value and, oh, let's put together this three year plan, let's do these types of things. And then you're expending all this energy. You have to realize there's this ripple effect every time you ask for something. And sometimes those things, they keep producing that thing for years, even though maybe you just needed it that one time. But it's true, when you're a CEO, sometimes you have to be very careful what you ask for in an organization. The board member would have a similar responsibility to ask, be gentle about what they requesting.

• 16:58Speaker 01

  The other thing I've heard, and curious if it's the same for you as founder, is that the most annoying text you can get from an investor is saying like, hey, did you see this thing that your competitor is doing? Or did you see this new competitor? And that's the one thing that is sure to piss everyone off and ruin their day.

• 17:15Auren Hoffman?

  Interesting. I don't mind getting that. Often I will know, 90% of the time I get those things. I'm well aware of that thing. Sometimes they're not even a competitor, they're our customer or something and they're just in a similar space or whatever. But every once in a while, it's like, oh, I haven't heard of this. This is interesting or this is adjacent. I guess if you get something that's, you just disregard, you know, it's not, I guess you have to reply, oh yeah, I know about this guy.

• 17:37Speaker 01

  But it sounds like you're happy for the crowdsourced competitive intelligence.

• 17:41Auren Hoffman?

  I do think that is, at least shows that they care. And I think that is important, that you want to know that your investors care about you and they're thinking about you. So not a terrible thing.

• 17:52Speaker 01

  What's the most useful thing an investor has done for you guys?

• 17:56Auren Hoffman?

  Sometimes they can help you not do something stupid. Or maybe not even help, but just having another person to talk it through is helpful. We want to acquire this company. Okay, let's talk it through. And then you start to realize through talking it through that, okay, it's gonna take us down this other path. And then it's gonna take all of your time. Then you're not gonna be able to spend time on your product. And you have to integrate these two different cultures. And maybe it's a good decision, maybe it's not, but they can help you think through it in a way. If they come in just right off the bat, saying that's a bad idea, that might not be the best way of doing it. If they're a thought partner, then I think it could be helpful.

• 18:33Speaker 01

  That is one that a bunch of folks through this process of writing these guides say a lot is just being a mirror to someone in those moments is really valuable.

• 18:41Auren Hoffman?

  So when you're on someone's board, you're also technically their boss. When I'm an investor right now, I try never to be on the board because I don't want them to have that perception. I want them to call for advice or help, or they're having an issue that maybe they don't feel comfortable going to their board members. And maybe it's a co-founder issue, some other type of issue that they don't want to talk to their board members are. Or comp, I've talked to a lot of people about comp. It's very common, by the way. CEO comp complaints are extremely common and very hard to have a conversation with really anyone. You can't have a conversation with anyone in your company about. But often people feel like they're undercomped. And often after talking to them, I agree with them.

• 19:21Speaker 01

  When does that start cropping up?

• 19:23Auren Hoffman?

  Four years in. So usually, right when you hit the four-year mark, five-year mark, depending on your investing schedule, you're all of a sudden like, my go-forward comp. A lot of the CEOs are, your second-time CEOs are often paying them nothing, getting zero salary. Second-time CEOs are getting very reduced. Even the first-time CEOs, they're one of the lowest-paid people in the whole company, often, in terms of salary. So they're often can't, they have six roommates. These guys are like five years into a company. The company is, on paper, is nominally successful, yet they're still barely able to get things moving.

• 19:55Speaker 01

  That's really interesting. I hadn't considered how.

• 19:58Auren Hoffman?

  Yes, it is much more common and they'll feel like, okay, I can't talk to my board about it. There's a gripe session, but then there might even be some way, okay, let's strategize about what we can do about it. Maybe there are ways we can do, but maybe there's a ways to get the board on, maybe there are ways you can think about it. I'm a big fan of out of the money options as well. So this is like the Elon Musk, what he did at Tesla. That's another way of aligning people. So there are other ways of doing some things.

• 20:23Speaker 01

  Most VCs I would hope are super on board with the Elon Musk options, right?

• 20:28Auren Hoffman?

  Most of them are not. And again, I think that's where they're adding negative value, but most of them are, at least in my experience, it is a lot of convincing. It's dilutive, even in the best case, it's dilutive. Of course, the best case is the one that they're hoping for. So it becomes this like harder thing. You have to make the case that yes, it's dilutive, but it motivates CEO more and all these other things and more likelihood that will be more successful, which is a hard argument to make. I don't even know if it's true or not. So it's a hard argument to make, but that's the argument that you have to do.

• 20:58Speaker 01

  I would have thought that one would be an easier one to get across the line.

• 21:01Auren Hoffman?

  You built the generalist as a media company, but then you got the mullet in the back being an investment company as well. What have you learned about that advantages and disadvantages of that mullet capitalism?

• 21:13Speaker 01

  I really like this model that feels like it's happening in a few different shapes. The media one is definitely one you see with the acquired guys and Paki from Not Boring and Terry Stebbings. And then you have some other flavors that are emerging, which I think is really exciting.

• 21:28Auren Hoffman?

  What are some other good flavors that you admire?

• 21:30Speaker 01

  There's the Canon Project, which I think is a really interesting one. Basically, a sort of recruiting business for tech companies that focuses, it seems, on the most promising elite college graduates or folks early in their career, getting them into tech companies. And then also there's a 20 million fund. And so having access to that pool of talent is obviously a really nice competitive advantage. And then there's another one that's sort of earlier in its life called Super Connector, where they've built sort of an interesting outsourced sales network that the manager initially started using to help his portfolio companies, but is now spinning out. Into a standalone business. And so I think there's like an interesting synergy there where it's like,

• 22:12Speaker 01

  and imagine this sales network being a really, really solid, great business, but also being this sort of unique value add that especially if you're not trying to be, play in the multi-billion dollar AUM club, you can win really meaningful stakes there.

• 22:27Auren Hoffman?

  You're a solo capitalist, right?

• 22:29Speaker 01

  That's right. Yeah, just me. It's a $15 million fund, very concentrated approach. So roughly 15 companies. And the idea is to help the founders of those companies with storytelling and to sort of a secondary effect network, just because the generalist does have a relatively broad reach.

• 22:47Auren Hoffman?

  There are quite a lot of these funds that are, let's say, five to $20 million funds. Often it's like a side thing. It's like a side hustle. They might even be a current CEO of a tech company. They may have other like you, they may be running a media company, maybe other. How do you think we'll see more of those in the future, fewer of those? Like, how do you think those will be evolving?

• 23:09Speaker 01

  I think we'll probably see fewer in the short term in the sense that I do think that sort of flight to brand names is real. And I could see that persisting. I think that if there's a really differentiated perspective and you're someone who has a strong network, raising a $5 million fund as a CEO of a successful company is not so hard. Right? It's more just a question of focus. And so I think there will be some of those folks, but on the margin, I'd say probably less. I do like the media flavor because I think there are some really nice overlaps that work together quite nicely. There are definitely drawbacks also, but yeah, I can't imagine we'll see tons more, given the current environment.

• 23:47Auren Hoffman?

  I'm not sure where I would predict.

• 23:49Speaker 01

  And maybe my answer was a good illustration that I'm not really sure either.

• 23:53Auren Hoffman?

  I could see both arguments for it. I don't know how it plays out because it is easier to go do. And you could see even these big mega funds almost funding, if you think of like Millennium, which is a huge hedge fund. Millennium is often, in some ways, just a collection of all these individual PMs, each one of which has, let's say, somewhere between 50 to 300 million in a pod. And they're almost the back office, like reallocating risk, understanding some things, making sure sometimes they'll double down on the trade that the person is making and stuff. You can imagine a huge manager like an Andreessen, all of a sudden just having all these other pods that are out there and somehow they interact, somehow they don't.

• 24:34Speaker 01

  Yeah, totally. Andreessen does seem to be institutionalizing its fund-to-funds practice more from what I can tell. So maybe that's part of it. Obviously, Mark and Chris Dixon are like very prolific LPs and a lot of funds.

• 24:47Auren Hoffman?

  They're LPs in Flex Capital.

• 24:49Speaker 01

  And generalist capital. So there you go. We're two for two on this call.

• 24:52Auren Hoffman?

  How do you think about exits? So Amazon went public, when they went public, I think, two years in, today's companies are taking at least off in 10 years before they go public. Some companies like Stripe, I don't even know if they'll ever go public, it's just who knows. Where do you see some of these second order effects of this timeline change?

• 25:09Speaker 01

  I can't remember exactly what pound here was. Was it 17, 20, something like that?

• 25:13Auren Hoffman?

  Yeah, it was a while.

• 25:14Speaker 01

  A long, long time. I think the clearest effect of it is just the, what some folks will call the private equitization of venture, where there is more of this booming secondaries market. You can see the rise of players like Industry Ventures, which started as this secondary-focused fund and has become, I think, a really important part of the ecosystem. And so the interesting things that happen as a result of that is maybe more of a bifurcation between true seed, early-stage investors, who are, because they have enough certainty in being able to sell secondary, able to underwrite again towards a 10-year timeline. And then the other side of that schism are the really long-term growth folks who take

• 25:57Speaker 01

  it for the second decade. That, I think, is something that we'll only see more of over the coming 10-plus years.

• 26:03Auren Hoffman?

  And you think some more seed companies will like, okay, I'm going to take 50% of my chips off the table, or that type of thing?

• 26:09Speaker 01

  I think there are two ways to play it. Either you stay pure, early-stage, and you get comfortable and build muscle memory and institutional knowledge around how to do those secondary sales as just like part of the model. Or I think you go the route of a lot of these mega firms and vertically integrate as much as you possibly can and prepare yourself to also hold maybe in the public markets and so on and so forth. And so I think that's a different way to do it, too. But if you're not blessed with those kind of resources, I think probably you'll have to find ways to build that liquidity in.

• 26:45Auren Hoffman?

  Certainly, when companies, back in the day, when a company, if you're a seed investor and a investor and the company went public, at that point, you'd usually distribute, maybe distribute the shares, but distribute it to your LPs. And often, there was still a huge ride from there. Now that companies are going public later, you could imagine like a big event where it's like a PE style event, and company's worth $5, $10 billion or something, and you may decide to distribute some of that to your LPs, give them some cash back or something.

• 27:15Speaker 01

  Yeah, totally. There's some interesting strip sales where folks will sort of sell a tranche of the entire portfolio to folks. And that's like an interesting way. I've seen some managers sort of lock in a certain floor for how well the fund does and give some money back to LPs while still.

• 27:30Auren Hoffman?

  Sorry, I'm not familiar. How does that work?

• 27:32Speaker 01

  It's called a strip sale. And so there's a fund called Blackbird, which is an Australian fund. Incredible performance. They share it all on their website. I think their first fund is 30x plus. And a big part of that was finding Canva early and then aggressively doubling, tripling, quadrupling down. Like, they really built a huge position. And so I don't know exactly when it happened, but at some point in that fund's lifetime, the manager, Nikki, was approached by StepStone, who said, hey, we want to basically buy a percent of the whole portfolio, which is a strip sale. And it allowed him to essentially realize 3x in returns. And LPs had the chance to sort of take some of that off the table,

• 28:14Speaker 01

  but also keep some of it riding. And so StepStone ended up having a chunk of a firm that ended up growing a great deal still, because Canva has continued to appreciate and the other companies as part of it.

• 28:26Auren Hoffman?

  So in some ways, it's just like a secondary, where if you're an employee at a hot company or something like that, you could sell a portion of your shares or something like that to go lock in something or buy a house or whatever it might be.

• 28:38Speaker 01

  Yeah, the nice part for the GP is that you're not only trimming your best position. Instead of just selling Canva, you sell a little of everything.

• 28:48Auren Hoffman?

  You're selling a secondary in the whole fund. Interesting. That's cool.

• 28:51Speaker 01

  I think it's a nice way to do it, honestly.

• 28:53Auren Hoffman?

  You write also a lot about politics. And how do you see this, where by the time this comes out, we'll have a new president, there's all this talk about DOGE and Department of Government Efficiency. How do you see that kind of evolving over time?

• 29:06Speaker 01

  I think it'll be absolute theater for the next four years. We were gonna see, I think, some astonishing stories. And I'm kind of quietly optimistic about Doge and what might happen over the next four years. I think there's lots of ways it could go wrong and-

• 29:22Auren Hoffman?

  If nothing happens, what's the best explanation of what did go wrong?

• 29:25Speaker 01

  Ego cataclysms. There's a lot of big personalities there, and I think there will be, at some point, differences of opinion and philosophies, maybe within Doge, but also between Doge and the administration. And I'm not sure how that resolves itself. And if they manage to avoid that, I could see some incredible things happening. And the amount of talent that they're pulling in seems to be no small feat. And I'm sure that there are tons of low-hanging fruit that really intelligent, tech-minded people can bring to the table. My big hope is that Doge invites an amazing writer in for the full two-year period and lets them chronicle this.

• 30:05Auren Hoffman?

  It rhymes with Mario.

• 30:07Speaker 01

  Honestly, there's probably a thousand people that would do it better than me, but someone should do it. Because either it's gonna work, in which case it's a case study for every nation on earth, every Western nation of how to do this, or it doesn't and we'll learn something really important from it. But I almost feel like there's a civic responsibility to have that story told, because it's the biggest case study of all time. It'll never happen.

• 30:31Auren Hoffman?

  I don't know. I actually think it could happen. I like that. I like that. Yeah, yeah, I feel like that could happen. What's a commonly held belief in tech, do you think, will look somewhat absurd 10 years from now?

• 30:42Speaker 01

  I've come to believe that the sort of long-term optimism around VR slash the metaverse is something that we may just more or less entirely navigate away from. There are some people who sincerely are excited about the idea of living in a Ready Player One simulation. And I think that's probably quite misguided. And I'm sort of optimistic that we're gonna navigate away from that threat of computing, except for use cases in which immersion is really magical, and maybe that's- Some fraction of gaming or something like that, but that sort of idea in general, I'm not convinced about at all.

• 31:22Auren Hoffman?

  It's literally like 10 years ago, the two things most people were talking about were self-driving cars and VR. And I had thought at the time that if I had to make a bet, I would bet that 10 years later, VR would be ubiquitous and self-driving cars, we just wouldn't be able to get there. It seems almost the opposite has happened. Not that really that many people I know spend time in real VR, but we're already making like a significant progress on the self-driving car front.

• 31:48Speaker 01

  Yeah, it seems like in SF, it's, I mean, pretty close to ubiquitous.

• 31:53Auren Hoffman?

  I was just in San Francisco a couple of days ago and I made sure to only do the way most and it was absolutely lovely.

• 32:00Speaker 01

  Oh, that's awesome. I still haven't ridden in one. So my next trip, I'm really excited.

• 32:05Auren Hoffman?

  It's incredible. It's an incredible experience, like just from the even just the UI of unlocking the door and getting in and saying, hello Mario, welcome. And just the whole thing is just so well done. And many of which you could even be doing it with a driver, but they've figured out a really good UI around it and it's experience. And then the car itself is just absolutely beautiful. It's one of the most beautiful cars I've ever been in, just the car. And obviously you could just have that car and drive it. But it's a gorgeous car and it feels luxurious just being in that car. Way more so than typical Uber Black that you're in. It feels way better in almost every dimension.

• 32:44Speaker 01

  I hope to get to SF this quarter at some point, so I will have to try and get in one.

• 32:48Auren Hoffman?

  It's the future. Is there a contrarian view you hold about how to build great companies?

• 32:54Speaker 01

  I've been as sort of a little mini project, going back to lots of the books about the best known founders of our era. So Elon Musk and Jeff Bezos and Steve Jobs. And just trying to actually figure out, what did they tangibly do? We hear so much, could read many a Harvard Business Review about what good management looks like. When you actually study it, it strikes me that so much of it is basically the entire opposite of what is heralded to be good management. And the one that comes up so often is just the degree of micromanagement from these people. It's so high. It must be really difficult if you're someone who isn't willing to have that level of input all the time.

• 33:37Speaker 01

  My contrarian opinion would be really just to build an insanely massive company, much of the time depends on just. An atrocious, persistent level of micromanagement.

• 33:48Auren Hoffman?

  That's the opposite of contrarian today. I feel like almost everyone's bought into that. I could be wrong. I don't know that many people do it, but nowadays it doesn't seem contrarian at all to believe that. I could be wrong, though.

• 33:58Speaker 01

  Maybe that's right. To the extent that then it feels strange to me that if it's accepted, that it's not practiced.

• 34:05Auren Hoffman?

  I think it's very hard to do.

• 34:07Speaker 01

  Just because it's from a personal perspective?

• 34:09Auren Hoffman?

  I think it's both interpersonally tough to do and also a lot of people you hire won't like it, so they'll quit. So you might not like that. You have to be okay with having some more interpersonal strife there. And then you have to get involved in all the details. And a lot of people like to be, oh, I'm strategic. It turns out they have to be involved in these very little details out there. And it turns out the strategic part comes from being involved in the details and not the other way around. But a lot of founders, they just want to be more strategic and they don't want to be involved in all this crap. They want to do the fun stuff.

• 34:46Speaker 01

  It's painful to be doing that all the time.

• 34:49Auren Hoffman?

  Yeah, you have to be reading deep in the specs and you have to be QA-ing things. And it's a different type of thing. I don't know how Jenson Wong has done it for so long. The guy's been CEO longer than anybody. Usually there's a half-life to being able to do it.

• 35:03Speaker 01

  Well, that's interesting. Ben, I'm going to have to update my priors on that and think of what's more off piece.

• 35:09Auren Hoffman?

  Do you think there's a big technology or innovation that's just significantly underrated right now? That will really have an opportunity to really reshape society, but most people don't appreciate it?

• 35:21Speaker 01

  Well, this is being talked about a lot because of the Bridge acquisition that Stripe made. But I continue to think stable coins are extremely, extremely interesting. And even despite the current hype, probably underappreciated by just how radical that is for the broader world.

• 35:37Auren Hoffman?

  Why do you need a lot of stable? Like, okay, if we just had one stable coin or two stable, do you need more than that?

• 35:44Speaker 01

  I think there are probably interesting properties that'll

• 35:46Auren Hoffman?

  Okay, I need a stablecoin for the Euro and a stablecoin for the Dollar and a stablecoin for the whatever it might be.

• 35:51Speaker 01

  Yeah, and you'll probably have, there are versions that have different sort of yield profiles and stuff like that. It wouldn't surprise me if, I don't know, there's a proliferation and then some degree of culling towards a few major players. But I'm an investor in a company called Dollar App that I remain just obsessed with because it's just essentially a neo-bank built on stablecoin rails that has allowed so much of Latin America to escape the cycle of insane inflation that Argentina in particular was in pre-Milay. And that sort of dynamic, I think, is just really, really interesting. And then the other thing that feels so radical in sci-fi, and we are all aware of it, but I don't know if we totally understand where it's going yet,

• 36:31Speaker 01

  is BCI, like brain-computer interfaces, both in the extreme Neuralink version and in sort of lighter weight versions that sit on your temple or behind your ear and that might sort of modulate your focus or direct your attention differently, things like that. So that's another thing that I think, I'm excited to see what happens there.

• 36:50Auren Hoffman?

  Or just things that help, there's gotta be these somewhat interfaces. In some ways, like this is a brain interface, right? You have a phone and it's almost like interacting, it's helping you recall things that you wouldn't normally recall, but it's not the best form factor. If I forget your last name, okay, do I go and search for Mario the writer or something? And somehow it needs to have a better way of interacting with my brain to be able to do that.

• 37:18Speaker 01

  Yeah, it's like this idea that I've wrote about and it's sort of half an idea really. It's just what does the better body for AI look like? Because it doesn't feel like the perfect form factor for AI is the phone per se. I thought Humane was an interesting attempt. You know, I like the look of Rabbit, Friend, all these different things I think are interesting experiments in that space. And maybe the closer you actually get to the human brain, the sort of more interesting that becomes.

• 37:43Auren Hoffman?

  Yeah, there is. The idea of the Google Glass is so appealing and so exciting to imagine you would be able to have an instant recall on someone's face and you'd have some other instant directions and other types of things. And in some ways, people will say, oh, this is terrible for social interaction. But today, when you're looking down at your device, at least you'll be present and you'll almost just have this heads up display while you're present about it. I'm like you, a little bit short on VR, but AR could just be world changing.

• 38:19Speaker 01

  Yes. If you can figure that out well, it feels like having a digital layer on top of everything, you can see so many use cases for that. Part of it bums me out a little bit. I think it will happen and I think I'll probably end up loving it. The piece of having your reality mediated by that is sort of bizarre, but will cease to be bizarre in a long enough time.

• 38:41Auren Hoffman?

  All of a sudden, we already could potentially look better on video right now. I might be looking better than I really am.

• 38:47Speaker 01

  Well, you look great.

• 38:48Auren Hoffman?

  Yeah, thank you. Thank you. So I got the filters and everything. Made me look 10 years younger. Now, maybe there'll be the true in real life, like all of a sudden it's, whoa. Do you use the Meta ones?

• 38:59Speaker 01

  I tried them out, but I haven't used them properly. Do you use it frequently?

• 39:04Auren Hoffman?

  I like it. So I love playing tennis and pickleball and stuff. And so then it's just fun. You can start taking videos while you're playing and then later on you'll be like, oh, that great shot. And you can replay it and send it to your friends and stuff. Or just if you're in the pool with your kids. So those types of things, it's just so convenient to take a video or take a photo or something. I do like listening. So if you're listening to a podcast or a music, you just put these on and you don't have to put the earbuds in. You can hear it. So I think that these things have these Meta glasses. More and more people will start to use them.

• 39:40Speaker 01

  Yeah, it feels like the only version of it that I've heard people, maybe not totally rave, but strongly recommend.

• 39:47Auren Hoffman?

  And we'll just see more and more of those types of things. It's a very V1 thing. We'll see more and more of them happen over time. How do you assemble your own news diet?

• 39:56Speaker 01

  I try and not read a ton of news, to be honest.

• 39:59Auren Hoffman?

  Should we read like more longer form pieces? Or, okay, if this piece has already been forwarded around a lot, it's two months later, then I'll read it?

• 40:06Speaker 01

  Or? Yeah, that feels like a great use of time. I feel like there's an amount of news that I'm happy with, where I sort of have a rough shape of what's happening, maybe on a given day or a given week. Even a week is totally fine.

• 40:19Auren Hoffman?

  So like a summary of the week, like The Economist or something or whatever? Yeah.

• 40:23Speaker 01

  Exactly, yeah. Like The Economist is a great way. You can scan the headlines, maybe read one or two articles.

• 40:28Auren Hoffman?

  Yeah, if you just read that every week, you'll be up to speed on everything.

• 40:32Speaker 01

  Yeah. And also, I think up to speed is often very overrated compared to the amazing long form things that could have been published 10 years ago or 50 years ago. That is actually much more interesting. So yeah, very little probably daily news, a lot of fiction, some nonfiction, and then a good amount of long form.

• 40:52Auren Hoffman?

  Now, you also published this piece called Monk Mode about your 2025 habits. Can you unpack those a bit for us?

• 40:58Speaker 01

  I was spending some time thinking, oh, what are some little experiments I'd like to run on myself and my day to day life this year? And so I basically decided for the next month to try out a few of them. And so the 10 of them that I outlined are things like doing fasting during the day, putting my phone on black and white mode, writing fiction every day.

• 41:19Auren Hoffman?

  Are you fasting the whole day? Or how are you thinking about that?

• 41:22Speaker 01

  No, it's pretty easy. It's like 16 hours minimum.

• 41:26Auren Hoffman?

  Breakfast, skipping breakfast.

• 41:27Speaker 01

  Yeah. And so often it'll end up being more like 18, but it's not, you're really crabby or anything like that. So, but I've actually just found that one super easy and pleasant.

• 41:38Auren Hoffman?

  There was a point in my life where I never felt hungry ever. I was just never hungry. It wasn't you just have breakfast, lunch and dinner. I always was full and then I would snack if I saw something or whatever. And literally, I never felt that, feel that thing in your stomach where I am hungry and your stomach is telling you I am hungry. I probably went three years one time without ever feeling that one thing, which is so weird. It's so, almost every human in history, until 100 years ago, has felt that for a very large portion of their life. And then you go like three years without feeling it at all. Cause we live in this world of abundant calories and abundant opportunity to grab food whenever we want. I said, okay, there's something wrong here. Humans should feel that occasionally. And we feel that once a day. That's probably good. It's probably a good thing, or at least a couple of times a week or something.

• 42:23Speaker 01

  Yeah, it feels like it sort of like weirdly sharpens the mind and also simplifies my day. There's just some amount of faffing about with like, oh, what am I gonna have for breakfast or lunch? And if I have to worry about it until 3pm, I got a lot done. Do you have any New Year's resolutions?

• 42:37Auren Hoffman?

  I make an anti-resolution every year. I've done things like eat more donuts, watch more TV. I've definitely done things like read fewer books, those types of things. This year, my anti-resolution is to curse more. And I've just been very low cursor all my life. I'd say we're taking this for a few weeks into 2025 and I am failing miserably at my F-bombs have not been coming out at the rate that they're supposed to be. It's just so anti my personality, but I'm trying to do it. And hopefully if you catch up with me in the mid-year, I'm just gonna be like cursing like a sailor.

• 43:12Speaker 01

  That would be a great, one of your hand drawn graphs. I'd like to see your cursing over time.

• 43:17Auren Hoffman?

  I have to start doing it more often. I am doing now like playing sports. It's more fun and people expect it and stuff. But in the business context or definitely around my kids, I have not yet been doing the cursing, but I plan to do it more. It just hasn't happened yet.

• 43:31Speaker 01

  Okay. Well, I look forward to checking in on that.

• 43:34Auren Hoffman?

  Two more questions before you leave that we ask everybody. One is, what is a conspiracy theory that you believe?

• 43:38Speaker 01

  Okay. Now I'm worried that you're gonna say, oh, everyone believes that. But my conspiracy theory is probably that the magnitude and significance of spying in Silicon Valley and venture in particular is probably way higher than we anticipate.

• 43:52Auren Hoffman?

  Like spying, like foreign countries or?

• 43:54Speaker 01

  Yeah, I think there's probably like every once in a while you'll see a news story pop up about it. Like I think was it Hone Capital had sort of an FBI probe happening recently. But it's so clearly an essential strategic asset that in general, Silicon Valley in general, so much of it runs on like these personal relationships and stuff like that. I'd be shocked if there aren't significant escapades occurring from foreign governments. And if I was a foreign government minded to try and do this, I would be like certainly trying to prop up managers and get young tech workers into all these companies. You hear about it more in the company context.

• 44:33Auren Hoffman?

  Certainly companies, big tech companies have actual spies of every nationality, including even friendly governments, the French, Israel, right? They'll have friendly governments, maybe even UK in there. And certainly they'll have Russia, Iranian, Chinese. So every company has those working, whether it's Google or Apple or whatever. But you're saying venture capital firms will have actual spies? Or will they have more like pseudo, okay, hey, the spy meets that person. They give information without even knowing that person's a spy or something like that.

• 45:07Speaker 01

  I think there's probably flavors of both if I had to guess. There's been plenty of capital from foreign governments that has made its way into Silicon Valley funds over the years.

• 45:15Auren Hoffman?

  And some of it could come through intermediaries. You may not even know exactly where it's from. Yeah.

• 45:20Speaker 01

  Yes, and it wouldn't surprise me if some of that is either explicitly part of some kind of operative or if it's sort of these people are being maneuvered in ways that they don't fully appreciate and sharing information that gets utilized. That's something that I always feel a bit crazy for believing, but I do genuinely think so.

• 45:37Auren Hoffman?

  I don't even think that's a conspiracy theory.

• 45:39Speaker 01

  Oh, man.

• 45:41Auren Hoffman?

  Almost certainly true. And I would say almost everyone I know believes it. Now, again, the venture capital one I haven't heard of before, so that's interesting. I hadn't thought, but certainly spies that are riddled in all these different tech companies.

• 45:54Speaker 01

  I think totally you expect it at Google or anyone of that magnitude.

• 45:58Auren Hoffman?

  A lot of them are even like customer support. A lot of them will have opportunities. Let's say you're inside X and you could look up somebody's, a person will have privileges to go, so you don't even need a super high level person. Okay, go look this up for me and they'll go look it up on the side. So that type of thing. And even think at one point, the government in Saudi Arabia was accused of doing that in Twitter. And if you were government, why would you not do that? It would just be crazy not to do that. Even if you're friendly to the US, it's just you want to be able to get access to these things that you don't normally have access to. There's a dissident in your country or something. You want to go find out more about that particular person. Maybe you want to see their IP address or some other type of thing.

• 46:35Speaker 01

  Or get some sort of compromat depending on the company or whatever it is. Yeah.

• 46:39Auren Hoffman?

  All right. It's super interesting. Okay. Last question we ask all of our guests. What conventional wisdom or advice do you think is generally bad advice?

• 46:45Speaker 01

  A piece of conventional wisdom in Silicon Valley is that I think it maybe it's a John Doerr quote as ideas aren't valuable, execution is sort of everything. And I definitely don't believe that. I feel like ideas are wildly underrated a lot of the time by that quote. Obviously you need application to build a great company, but a truly novel idea is one of the rarest things in the world.

• 47:07Auren Hoffman?

  That's so true. Every once in a while you hear a company that's doing something, they tell you about the idea and you're like, first of all, sometimes it sounds so simple. You're like, I can't believe I didn't think about like, it's so obvious after they told it to you and you're like, oh my God, but it's so brilliant. You hear that not pretty often, actually. You'd be like, oh my God, that's so obvious, so smart. And then you kick yourself like, why didn't I think of that? I've been in this industry for X, three years. I've never even thought about this thing. I think I would have disagreed with you if you just said that, but I think you might be convincing me on this one.

• 47:38Speaker 01

  Oh, good. There was some snippet that I saw the other day where it was like a screenshot someone shared of messages when Mark Zuckerberg was like 20 or something between him and a friend. And he says something like, there are really only about six people in the world who have good ideas. I don't quite agree with that, but I do think that it is extremely rare and very underappreciated. And a good idea is not, hey, let's do this exact company, but 1% different. It's like, when you feel it, as you say, you sort of have that like, that's an incredible thought.

• 48:07Auren Hoffman?

  Yeah, that's interesting. This is awesome. Thank you Mario Gabriele for joining us on World of DAS. I follow you at Mario Gabriele on X. I definitely encourage our listeners to engage with you there. This has been a ton of fun, super interesting.

• 48:21Speaker 01

  Yeah, I loved it. Thank you so much for having me.

• 48:26Auren Hoffman?

  Thanks for listening. If you haven't already done so, please subscribe to World of DAS wherever you consume your podcasts, YouTube, Apple, Spotify, and more. And please help us get discovered by leaving a review. And check out worldofdaas.com. That's worldofdaas.com. And of course, connect with me on Twitter, at Auren. That's A U R E N. Would absolutely love to hear from you.