20VC: Turning Peter Thiel's $100K into $10M Angel Portfolio | The One Man Accelerator at The Four Seasons | Why VCs Can Be Sharks and What Founders Need to Know | Why Stocks and Cash are BS and You Should Invest in Land with Josh Browder

Josh Browder is my favourite emerging manager. As the Founder of Browder Capital he has been the first check into unicorns like Micro1, Owner.com and Yuzu Health to name a few. He turned his Thiel Fellowship Grant of $100K into a whopping $10M angel portfolio. All new investments move into Josh's Four Seasons Residence where he then trains them on company building. They are only allowed to leave when they raise their seed round. In addition to this, Josh is the Founder & CEO @ DoNotPay, the now profitable company that has raised $22M from Marc Andreessen and others. AGENDA: 00:00 Why I believe young founders make the best founders 02:10 What do I look for in founders I'm investing in? 10:00 How I test for founder commitment pre-investment 11:00 What do I want to see in the childhoods of the entrepreneurs that I back? 12:05 Why I make founders live with me in my Four Seasons residence after investing 14:00 There are three reasons why pre-seed companies fail and how I solve for them 15:45 What do I look for in a team to assure me they will last? 16:50 Is $5 million post still attainable in this world? 17:15 Should we be worried about the increasing levels of fraud at the early stages? 18:10 Which Silicon Valley investor was the most impressive? 20:00 Do VCs really add value? 20:50 Does university carry less value than ever and should founders drop out if they have a dream and an idea? 24:00 The advice of one lawyer changed the entire trajectory of this multi-million dollar company 28:10 I would never invest in someone that I met over Zoom 29:20 Are all the best founders you invest in delusional? 31:10 What is the biggest benefit of being a Thiel Fellow? 36:20 The problem of accelerators and why artificial constraints can enforce quality 38:20 How we used Mark Zuckerberg's house as a viewing instrument tool to get users 41:20 My pre-seed cheque in Micro One is now worth hundreds of millions and my lessons 43:20 The biggest mistake VCs are making in assessing founders 44:10 Why I will never tell the entrepreneur what to build and why I place little value on ideas 47:00 Why kingmaking is real and why you should accept half the price from a tier one firm 49:00 My biggest lessons on reserve investing 53:00 Why price rounds are bullshit and we should do more SAFEs 54:20 What all founders need to know about signing with a VC 55:10 Single biggest advice to founders on how to get the best price 57:30 What role does not exist today that will be massive in five years' time? 59:10 Stocks are bullshit. Cash is bullshit. I put my money in land. My personal investing strategy 1:01:00 Why the Trump administration is unwaveringly good for US business 1:03:20 Why competitive markets are the best investments 1:05:40 The serendipity of San Francisco is unmatched 1:08:10 What things does no one know about Marc Andreessen that everyone should know?

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

• 0:00Speaker 00

  If you're not motivated by the fear of losing, I think you're asleep at the wheel. At the very beginning, there's three reasons why pre-seed companies fail. They run out of money, they run out of hope and co-founder disputes. There are three types of people, those who make it happen, those who watch it happen and those who wonder what happened. Pitching VCs is like a game of poker. You should never reveal too much information about what you're seeking. I put all my Thiel Fellowship money and I invested it in Adam Guild and other amazing entrepreneurs. I think when it's all said and done, it'll be in the eight figures. If you back someone who's above average IQ, very smart and never give up, of course they'll succeed. The VCs will say anything to get you to sign right there and then, anything.

• 0:44Speaker 00

  For every anthropic employee who's making 20 to 100 million, there's 7,000 block employees being laid off. It's not sustainable. You can't have 50,000 people with all the money. I think actually there could be a revolution in our lifetime. Something has to change.

• 1:00Harry Stebbings?

  Do you think you will make more money from your investing than you will do not pay?

• 1:04Speaker 00

  I think unfortunately I'll make more money from the investing.

• 1:07Harry Stebbings?

  This is 20 VC with me, Harry Stebbings. Now, if I could invest in one emerging manager, sub $50 million fund, it would be this manager today, Josh Browder, Browder Capital. Honestly, I thought this guy was amazing when I came into this interview, but I didn't know the show would be quite as good as this turned out to be. So there's some insane points that are important to remember with Josh. He makes founders that he invests in live in his spare room the four seasons until they raise a seed round. Also, he turned his Thiel Fellowship 100K grant into a $10 million angel portfolio. He was one of the first investors in companies like Micro One, Yuzu and many more.

• 1:47Harry Stebbings?

  I've never had such good founder references on any GP that we've ever had on the show, as I have with Josh. I spoke to 12. Josh got an average of 9.2 out of 10 across those 12 founder references. This is one of the best shows that we've done in a long time. And I honestly just felt really grateful to have made a new friend after doing this show with Josh. But before we dive into the show today, did you know the industry average for booking a business trip is 45 minutes? That's a massive waste of your team's time. Well, with Navan, your employees can book a trip in just seven on average. Navan is the AI-powered travel and expense platform designed for companies that value efficiency.

• 2:28Harry Stebbings?

  It drives real business impact through high employee adoption and automated policy control. Now, the built-in AI approves in-policy bookings and blocks the rest automatically. This allows finance teams to stop chasing receipts and skip the month-end chaos. And you get this real-time visibility that can save your company up to 15% on your travel budget. And that's why leaders like Visa, Stripe, Figma, and even Anthropic rely on Navan these days. Go to navan.com/20vc today to see for yourself, and you'll get a chance to win two business class flights anywhere in continental US. No purchase necessary, rules apply. Head over to navan.com/20vc now. Once Navan simplifies the travel, Air Wallets simplifies the spend behind it.

• 3:12Harry Stebbings?

  Founders, let's get real about the growth tax. You've raised VC funding and you're scaling globally, and it's no longer about shipping product, it's about orchestrating operations across continents. But suddenly, your payments and finance stack is choking your growth. You're logging into lots of different banking portals, waiting days for transfers, and reporting across entities. It's operational drag and it's at your scale. It's costing millions. That's why I'm so excited to partner with Air Wallets. Air Wallets are more than just a banking alternative to HSBC or Citi. Air Wallets brings you an intelligent financial operating system that powers how global businesses operate and grow, allowing you to manage and automate banking, treasury, payments, and spend. The most exciting part for me, they're heavily investing in agentic finance.

• 3:55Harry Stebbings?

  If you're scaling globally, you need a banking and finance platform that's borderless, real-time and intelligent. Check out Air Wallets today and see how they're helping thousands of businesses like Canva, McLaren, and Deal. Scale at airwallets.com/20vc. Terms and conditions apply. Your monies are safeguarded, not FSCS-protected. See airwallets.com for more details. While Air Wallets helps your Money move globally, Vanta helps your security keep up. Security and compliance done wrong is a giant headache. Security and compliance done right, though, well, that's Vanta. Vanta helps you earn trust and speed up growth, no spreadsheets required. For startups low on time and resources, Vanta becomes your first security hire,

• 4:38Harry Stebbings?

  using AI and automation to get you compliant fast and unblock really big deals. And if you're big enterprises, Vanta is your AI-powered hub for compliance and risk, bringing together data from across your business and automating workflows so you can prove trust at any moment. Vanta scales with you at every stage. That's why top companies, from startups like Cursor to enterprises like Snowflake, choose Vanta. Do security and compliance right. My listeners can get $1,000 off Vanta by going to vanta.com/20vc. That's vanta.com/20vc for $1,000 off Vanta. You have now arrived at your destination. Josh, dude, I am so excited for this.

• 5:23Harry Stebbings?

  You mentioned very kindly before the show about my levels of prep. I think it's stalking to some extent, but I have loved getting to know you. So thank you so much for joining me first.

• 5:32Speaker 00

  Thank you for having me. Growing up in the UK, I'm proud to have known of you before you became a world famous podcaster.

• 5:40Harry Stebbings?

  Dude, I think most of the stuff I post these days actually just rage baits most people on LinkedIn. But I want to start with one that I always actually wonder with CEOs that I interview and meet, which is what actually inspires or motivates you more? Is it the fear of losing or is it the immense satisfactory feeling of winning?

• 6:01Speaker 00

  If you're not motivated by the fear of losing, I think you're asleep at the wheel. Only the paranoid survive and the world is changing. It feels like the world is changing, a year's worth of progress every few weeks. So definitely the fear of losing.

• 6:14Harry Stebbings?

  You know, when I started, you very kindly said like about getting to know me through the show. I still kind of have this to this day in all honesty, and this is why the show's become more and more successful, which is I don't really care what people think. But like, I was terrified of being Macaulay Culkin. You ever seen Home Alone? And he was very famous when he was young, and then like, nothing became of him. And I was terrified of being the like, shot in the pan. Did you ever have that? Because you were very successful young. I remember seeing you in the same vein, like on magazine covers, raising twenty two million dollars. Did you feel that pressure early?

• 6:45Speaker 00

  There's a saying among the Teal Fellows that they have an expiry date. We all know these people who are very hyped and then maybe didn't stay relevant and they just, some of them lost their minds. And so that was always a huge fear of mine. You always have to constantly be reinventing yourself to kind of stay relevant and adapt. Because the world changes very quickly. But I started Do Not Pay in high school when I was seventeen. That was a completely different world back then. That was in twenty fifteen.

• 7:10Harry Stebbings?

  I am actually just gonna start with that actually and kind of mix up the schedule because you bet intensely now often on very young founders. And I spoke to so many of them before this show. Why is it that you place such a bet and conviction on very young founders so much earlier than maybe others would?

• 7:28Speaker 00

  I think young founders have no option but to succeed. If you back a Google engineer, the first thing they'll do is they'll hire ten of their friends and it's like this endless like scheme of hiring. The first thing a young founder will do is they'll build the product and they don't have anything to fall back on. Especially if they have a chip on their shoulder, the only thing they can do is succeed. And so I think the grit level with young founders is ten X. Being an entrepreneur is like eating glass. If you don't like have a true dedication to win, they'll give up at the first opportunity.

• 7:58Harry Stebbings?

  It is the shittest question, which I've often been asked, but actually I've found there's more and more nuance to it. And Dak should, Grapthol told me I should ask this. He said, you back founders that others maybe wouldn't when you actually look at them in that instance. What is it that you look for that is non-obvious or atypical in the founders that you do invest in?

• 8:20Speaker 00

  The number one thing I look for is a deep connection to the problem that they won't give up. I go back to my own journey. I'm Mr. Do Not Pay. I'm the type of person to get 10 parking tickets just to test out the service or wait on hold for hours to save £20 or dollars. And I look for those founders with a really deep connection to the problem. So for example, I was in the very, very first pre-precedent of a company called Owner.com with Adam Gilth. He built the initial version of his product to help his mother's dog grooming business. So many of these founders come up with these BS stories, but that is a real story and he really did it to help his mother. And similarly with me, I really did it because I hate the government with parking tickets. And so I look for that sort of founder-market fit where they're their own first customer. And I joke, if

• 9:05Speaker 00

  you're building for yourself, at least you have one customer.

• 9:08Harry Stebbings?

  Do you worry about the susceptibility of founders when they're that young? Bluntly, I see a lot of very young founders now getting so caught up in the fundraising game that it's like, it's almost a game of, I raised around them from who? And it's like, we're building a business to create a product for customers. Let's not forget why we're here. Do you worry about that?

• 9:27Speaker 00

  Yes. So I escaped the UK to go to Stanford and there was a Stanford Review article, which is a student publication. And the publication said, it's easier for a Stanford student to get into YC than it is for them to get a job now. We've seen a rise of, I would say, fake founders where they don't have that connection to their problem and they're just starting something just because it's cool or because they have nothing to do for the summer. And actually, being an investor, you have to be very careful about backing students over the summer because part of the signal is they've dropped out and they're going all in on this. But of course, during the summer, you can't actually tell if they've dropped out. So I'm actually scaled back a bit during the summer, not because I'm in Capri like all the other VCs, but because you have to worry about these fake founders.

• 10:10Harry Stebbings?

  How do you determine whether someone is a fake slash tourist founder versus not? I look at some of mine more recently, actually, and I've made this mistake where I thought they were mission-driven and it transpires afterwards that they're not.

• 10:23Speaker 00

  So I have a huge list of heuristics and I have small signals and big signals. So a small signal would be, let's meet At eleven P M. And the best founders would say, sure. The mediocre ones would say, oh, no, can we meet Tuesday week? So we meet at eleven P M. And then I just like hit them quick fire with questions. And everything they say, I want them to validate. And it's almost like a visa interview. For example, they'll say, I'm at five thousand in revenue. I say, let's look up your Stripe right now. Fake ones get really nervous. They're like, I don't have my Stripe on my phone. What serious entrepreneur doesn't have the Stripe app on their phone? And then I go into like these tactical questions, like, what's your goal for the next three months, six months, one year?

• 11:05Speaker 00

  A D minus answer would be some vague nonsense, like, I want to get a partnership with Anthropic. An A plus answer would be, I'm going to like fly to Milwaukee to meet with a dentist to get them to sign my five hundred dollar a month SaaS plan. So it's like very tactical. Then I look for, do they have a top one percent skill in something to achieve their business goals? And you see the best entrepreneurs, they've proved something in their childhood. Maybe they were selling Minecraft servers like Adam Guild or John Andrew, the founder of Wanda. Maybe they were doing sneaker bots like the founder of WAP. My generation, when we were growing up, it was very big to do jailbreaking. So jailbreaking or competitive drone racing, so many of these things. And it doesn't have to be engineering, like I backed the youngest engineer at Amazon. That was really cool.

• 11:50Speaker 00

  But it can also be distribution and like making sure their sneaker bots get to the right audience.

• 11:55Harry Stebbings?

  I heard from some of the founders that you will house them in the Four Seasons residence. Can you talk to me about this and how you structure that environment that you put them in?

• 12:07Speaker 00

  I noticed over the years, so I've tried all sorts of investments over the years and things have done very well. But the best sort of investments are the day one investments for me. And I think everyone is playing different games. Some people are playing the games where they're getting into the hottest companies, a hundred million valuation, and then they become worth twenty five billion one day. The game I'm playing is I'm getting into founders who, when they're just starting, they're not polished at all. And they can really use my advice and my reliving my founder journey to polish them. And I try and get in sub five million valuation. And the question I'm sure you have is, how do you account for the adverse selection of getting in at those low valuations? And I noticed that over the years, the best founders that I invested in, I actually lived with them at some point.

• 12:52Speaker 00

  I was roommates with the founder of a company called Assured, where we both rented the house where Facebook was started over the summer at Stanford. I was roommates with the founder of a company called Yuzu, where he worked at Do Not Pay, so he lived in the Do Not Pay house. The founder of Micro One lived in my spare bedroom when I was his first investor.

• 13:10Harry Stebbings?

  And what is it you see in the best in those periods?

• 13:13Speaker 00

  So I've made so many mistakes with Do Not Pay. I'm 10 years in now. I can give them a crash course so they don't make the same mistakes as me in a matter of three weeks. And bear in mind, these are very young, college, first-time founders, so they don't even know the difference between pre-money and post-money valuation and all of this. So it's almost like a one-person accelerator. It's one partner at the accelerator, me, and then one founder or one company. And you mentioned Four Seasons. I would say it's not that luxurious. It's adjacent to the Four Seasons. It's technically a Four Seasons residence, but sometimes if there's four co-founders, it's four beds in one room. So I'll rent beds for $50 a night, and then they all, one company, they live in one room.

• 13:54Speaker 00

  And I say to them, it's in California, so it's like Hotel California, where you can't check out until you've raised your institutional seed. And then the company is off life support, and I can relax a bit.

• 14:05Harry Stebbings?

  Okay, I just have to delve into this process. What are the main fuck-ups that they make in that period where they're there? What do you need to shape, polish, or create in that period?

• 14:15Speaker 00

  At the very beginning, there's three reasons why pre-seed companies fail. They run out of money, they run out of hope, and co-founder disputes. The running out of money comes down to pitching, and I'm lucky to have pitched almost everyone in Silicon Valley over the years, successfully and unsuccessfully. And so I teach them how to present their business. Running out of hope is also really important. I want to make them feel like they're making progress every single day, encouraging them to ignore all of the vanity signals of being a young founder in SF and actually focus on their customers. And then co-founder disputes. Building the team, I sometimes recruit my smart friends who are not ready to start a company into their organisation and I get them the vesting and all the boring stuff.

• 15:00Speaker 00

  Like everything the Y C would say, I I I'd say to them.

• 15:03Harry Stebbings?

  It's so interesting that we had money, hope, co-founder dispute. Co-founder dispute is one that really kills companies, I find. How do you measure, analyse co-founder relationships when they're staying with you? And any lessons there?

• 15:17Speaker 00

  So the good news is that with all sort of red flags, young founders are very bad at lying. If they say we've we've kind of best friends and then they start interrupting each other, you kind of know that that that's not true. So I look for kind of a long history. The best co-founder dynamic that I've seen among young founders is friends from high school. So I was the first and they live with me as well. I was the first investor in a company called Hallidir very recently. They were friends from high school, went to different colleges, dropped out and rejoined. So that's the that's the kind of perfect dynamic. One thing I'll say is I I've noticed a really worrying trend of people reverse engineering what I say on podcasts and in articles to pitch me exactly what I'm looking for.

• 15:59Speaker 00

  Just now I said, friends from high school, I can guarantee you in three weeks, someone is going to say we were best friends in high school. And so this is a worrying trend where they're using Claude and Chat G P T deep research. And so I have to worry about that.

• 16:12Harry Stebbings?

  It's the biggest challenge that we actually have because I've been very prescriptive in the past that I look for. And this sounds awful, but like family trauma is a big sign of like future success, gaming and then early entrepreneurial success. I would say nine out of 10 young founders that we meet pitch those three exactly. And you're like, wow, this is very aligned.

• 16:30Speaker 00

  Yeah, it it's disgusting. It's a certain type of fraud. I call it ideological fraud.

• 16:36Harry Stebbings?

  I agree completely. When you bring them into the house, is that when you put the money in?

• 16:40Speaker 00

  Yes, so I put I put it in just before.

• 16:43Harry Stebbings?

  Okay, and is that same size check at certain price?

• 16:47Speaker 00

  Yeah, yeah, and it it varies depending on how many co-founders there are, if it's just one. Sometimes I I don't mind solo founders. If it's like three dropouts from Harvard, then the price reflects that.

• 16:58Harry Stebbings?

  Do you find that five million price is still attainable?

• 17:02Speaker 00

  That's that it's sometimes can be lower, sometimes can be higher.

• 17:05Harry Stebbings?

  Because I just find dropouts from Stanford or Harvard in particular, just see TechCrunch and see Twitter or X and go, I'm I'm 25, I'm a C S grad from Stanford.

• 17:17Speaker 00

  Oftentimes it's so early that it's definitely possible. For my latest fund, I've done thirty-three deals so far. The median across the entire fund is five. The minimum is one point five, maximum is twenty-one.

• 17:30Harry Stebbings?

  Do you worry about the level of fraud that's going on with the current ecosystem, with the founders that we're seeing? Do you worry about that increasing with the pressure we're putting on?

• 17:41Speaker 00

  I think that at the earliest stages, the only fraud there can be is ideological, which is not illegal. It's not illegal to say you've had childhood trauma when you've actually grown up middle class, and that's a huge, huge issue. It's interesting because the best founders are hustlers in some ways. So it's a balance. I actually think it's becoming easier and easier. The world is becoming much more transparent. You have Twitter sleuths who will detect anything, as like several companies recently have been taken down because of like someone published an article about stock two or something like that, and the entire company is done. So I think actually that the illegal type of fraud is becoming harder.

• 18:18Harry Stebbings?

  You mentioned you've pretty much met every venture investor in the valley. What was the best venture investor meeting you had? You know, somewhere you just meet them and you're like, wow, this person is really smart.

• 18:29Speaker 00

  I think it was Marc Andreessen. Like so many founders, after Do Not Pay got all of the hype and we were starting to get a lot of usage, he reached out on X and he said, you want to have breakfast? I was very mission driven. I was not one of these like Stanford founders or anything. I was actually on the verge of making Do Not Pay a nonprofit. In fact, I had a pitch to like nonprofit style investors, not investors, just funders, to make like a legal nonprofit to help people with their rights. I was that focused on fighting the system. And I went to this breakfast and Marc convinced me that the biggest organizations are for-profit entities and you can have ten times the impact of a for-profit company because the incentives are aligned.

• 19:11Speaker 00

  And Do Not Pay was a very small example of this, but I guess you're seeing this today with OpenAI, with the hundred and fifty billion dollar lawsuit where they switched from nonprofit to for-profit. So that was the first major lesson I learned, I would say.

• 19:24Harry Stebbings?

  How old were you at that breakfast?

• 19:26Speaker 00

  I was eighteen. Or nineteen.

• 19:27Harry Stebbings?

  Were you nervous?

• 19:29Speaker 00

  I was so nervous and it was a breakfast meeting.

• 19:33Harry Stebbings?

  Where was it?

• 19:33Speaker 00

  It was very, it was a house, his house in Atherton and he came down in like breakfast clothes and.

• 19:39Harry Stebbings?

  What a breakfast clothes.

• 19:40Speaker 00

  I was fresh off the boat. I'm not trying to get in trouble, but I was like fresh off the boat from the UK, came down in breakfast clothes. And yeah, he's, but I would say all of the luminaries are incredibly nice people. But Mark Andreessen is by far my favorite and I'm very fortunate. He's my first investor at Do Not Pay and also first institutional investor for my fund.

• 20:01Harry Stebbings?

  That is absolutely amazing. I love that. I also love breakfast clothes. I have no idea what that is. Do you think venture investors add value? And Keith Roy says, the best founders I work with, honestly, they don't need venture investors. Most VCs on LinkedIn or Twitter tell me that I'm an idiot for saying that. Do you find that to be true? What side of the fence do you sit on?

• 20:22Speaker 00

  I have a friend, he has a great saying, which I'll copy. There are three types of people. Those who make it happen, those who watch it happen, and those who wonder what happened. And I think at best venture investors are in the second one. Sometimes unfortunately they can be in the third. So the biggest issue is like they don't go crazy on the founders, which happens a lot. But of course they can add value at strategic points.

• 20:44Harry Stebbings?

  Going back to the core ingredient of success in venture, that the founders themselves, you're a dropout. How do you think about the value of university today? And if you were sitting with university students today, advising them on whether it's worth staying or worth pursuing a dream?

• 21:00Speaker 00

  People see their life as paint by numbers. So they say, if I go graduate, I go to business school, I go work at X company. Then in five years I'll be ready to start my company. The problem is the world changes so quickly that the paint by numbers approach doesn't work anymore. I would say to any founder who has an idea of what they want to do, they should just go for it and the world won't wait for them. On the other hand, you see a lot of people drop out just for the sake of it. In fact, when I, when I dropped out in 2018, I actually had like one or two classes left at Stanford. So I was very close. It was very kind of taboo to drop out. Now dropping out is almost. The establishment, so you see people drop out just for the sake of it. And I think that's definitely wrong because there are huge advantages to being in college,

• 21:45Speaker 00

  even if you're doing a startup, like you can recruit your friends. You have your college email and people will take you more seriously if you email them from Stanford or MIT.edu. Also, people give college students more of a free pass. If all of these founders who are getting this controversial stuff are in college, they might be able to kind of pivot more quickly.

• 22:04Harry Stebbings?

  Do you think, you know, your father's an incredible figure, incredibly respected figure, but there was a little bit of a safety net. Do you think your ability to have a safety net slightly enabled you to drop out?

• 22:15Speaker 00

  No, I think the opposite was true. So I was sitting, and I've never told this story before, but I was sitting at a poker game at Stanford with my friends. This is no exaggeration. I got a news alert saying, so my father is a human rights activist and he's like an enemy of the Russians. It was a news alert about my father that he'd just been arrested. They just, the Russians managed to get him. It's just made me incredibly paranoid. And so I think I was more paranoid. Most people don't have the mafia after your family. And so I was always like paranoid and fearless. And so I think actually it kind of made me more paranoid to like take big swings. I called him, but it didn't go through.

• 23:01Speaker 00

  Then I called my mother and then I like cashed out my chips and left the poker game and dealt with the situation. And as a 19 year old college student, there's very little you can do in that situation. But my biggest thing was trying to make sure he didn't get extradited to Russia because if he got extradited, really bad things would happen. I went to an event, British students at Stanford, and it was hosted by the consul general. And I thought the one thing I can do, and maybe I'll email the consul general. So even as a teenager, I was just trying everything. Of course, that made no difference.

• 23:33Harry Stebbings?

  Do you know what I find very funny? If you've been like, you know what? I'll deal with this later. I'm playing poker right now. That is quite the story. I'm.

• 23:43Speaker 00

  Yeah, it was a Financial Times news alert.

• 23:45Harry Stebbings?

  Yeah, that's pretty terrifying. Can I ask you, when you think about like a really challenging time like that, seeing that news, can you take me to a really hard day you had with Do Not Pay? And how did you learn about yourself from it?

• 23:58Speaker 00

  This is probably the hardest point of Do Not Pay, which is three years into the company. So I'd raised the pre-seed from Andreessen, from Mark. It came time to raise the seed two or three years later. Do Not Pay was incredibly popular. Millions of people were using our free product. And I thought it was a slam dunk pitch. That was a huge mistake. I was going down Sand Hill Road because all the VC firms were in Sand Hill Road back then. And one after the other, they were rejecting me. I went just down the list, rejection, rejection, rejection. This was really depressing because I'd actually just dropped out like a week before. As passionate as I was about Do Not Pay, there's only so far I could go with just me. I needed to hire a real team and then raise some serious money to keep it going.

• 24:41Speaker 00

  I had like two or three pitches left and I thought if these don't go well, I'm just gonna throw in the towel and like do something really depressing, like go work for big tech or something, go work at Google. Because I just have to give up, even go back to Stanford. So the next day, it was one of my last pitches. I guess this kind of speaks for how bad the situation was, but I turned to my outside counsel lawyer for advice. If you're turning to outside counsel for like business advice, then you know things are really bad. He's an amazing lawyer. He's a partner at a firm called Wilson Sincini. His name is Damian Weiss. He's like on the cap table of all the amazing companies. I told him the predicament I was in and he said, well, do the whole pitch in front of me right now.

• 25:24Speaker 00

  So I gave him the whole pitch and he interrupted me halfway through and he said, you're doing it completely wrong. He said, first of all, they're not investing in the PDF deck or some presentation. They're investing in you and the product. And so the fact that you're not doing a demo is criminal. So I kind of quickly scrambled together a demo of a robot appealing someone's bank fees, because Do Not Pay was expanding to bank fees in the US, and added that to the presentation. He said, second of all. No one really knows what this can be. You should put the logos of the biggest companies that you one day want to emulate. So I stuck in the logo of Intuit, which is a $200 billion company in the US. And I said, we want to be the TurboTax, which is one of their products of consumer rights. And I also put the Honey logo, which was just acquired that year for $6 billion.

• 26:08Speaker 00

  And then I put Credit Karma, which was acquired for $8 billion. Put that in the deck. Said, finally, this was around the time of the Cambridge Analytica scandal. You shouldn't say you want to do advertising. Advertising is not very fashionable right now among VCs. I said, okay, what should I do? He said, subscription. So I put in subscription. And I didn't even really believe that it could be like people would subscribe to it. But I put in subscription. And he turned out to be right. Everyone now, subscription is our main business model. So I made those three very minor changes to the deck. Did my presentation the next day. And Harriet was like a night and day difference. Everything changed. Not only did they want to invest, they like, I left the room for a few minutes. I came back and they wanted to invest on the spot. First of all, Silicon Valley is such a kind of herd mentality place.

• 26:52Speaker 00

  Even the people that previously rejected me, once they found out that this firm wants to invest, everyone started rescinding their rejections. And I thought that was a bit depressing. And second of all, it taught me a really valuable lesson, which is nothing changed about the company. Nothing changed about me. Nothing changed about the team. Nothing changed about our usage. But the most minor differences in framing and strategy made all the difference. That's actually the, some of the lessons I give the founders I invest in. If things aren't working, you just need to change the framing just slightly. And that can make a monumental difference.

• 27:24Harry Stebbings?

  What do you find is the biggest problem with the framing that founders often come in with?

• 27:29Speaker 00

  I tell every founder I invest in, don't have too high of expectations. Pitching VCs is like a game of poker. You should never reveal too much information about what you're seeking. So every founder I invest in, I say, don't reveal the price that you want. The price is a function of how hot the deal is, which ironically is less hot if you go in swinging for the fences with something too high. Secondly, I try and relive my story and I say, you have to do a demo. There's a famous story. I gave this founder advice to do a demo. He's a biotech founder. And he even like did a demo, like a very personal demo. Everyone was passing on him and then he did this demo and then a top tier person came in. So I definitely do the demo, make it all about them. Also, I mean, there's a million things like the CEO should be doing it, not like five founders

• 28:14Speaker 00

  speaking over each other. There's like a whole list. I, I send it to any founder I invest in.

• 28:18Harry Stebbings?

  One of the worst things for me exactly there is like when three people come to a Zoom call in particular, and it's like, we have 30 minutes. My job is to build a relationship, try and get to know you. Suddenly there's three founders on a call.

• 28:29Speaker 00

  Yeah, well, Zoom is the first mistake. They should fly to London. In person, I say you should reject Zoom and always do in person where impossible, where possible. If I was pitching you, I'd fly to London.

• 28:39Harry Stebbings?

  That's very sweet. I would invest in you if you want to London. You said that like, I didn't really believe like subscription could be it. We can put some logos of other big companies. How do you think about the Walt Disney? Sell me the dream, sell me the story versus Jerry Maguire? Show me the money, sell me what you have, the hard statistical. How do you advise that? And is there a blurring of lines?

• 29:01Speaker 00

  So I think being British, the substance is always, I try and be more substantive than hypey. I think it's just the UK culture. When I give references, I always say, this reference is actually really good because it's coming from a British person. I'm not like one of these like hypey Americans. And I give founders I invest in this advice. It's okay to be as hyped as possible with your vision and ambition. You should have boundless ambition, but with how you're describing the current state, it should be very accurate. So I think there's a balance with what you, your plans are versus where it is today.

• 29:34Harry Stebbings?

  Do you think that we actually expect too much in the ambitions of young people? And what I mean by that is when I first started the show and you kindly said you listened to early on, dude, I would, I just wanted to be an associate at a big fund. Like that was the dream job. I would have been a terrible associate, I'm sure. But we put a limiter on our ambitions because we don't know what we're capable of. Do you think we need to give founders credit or leeway to have their ambitions expanded?

• 29:59Speaker 00

  Unfortunately, all of the best farmers I've invested in, they've had delusional levels of ambition. The more delusional, the better. And unfortunately, it is a sign of success to be delusional. So I think it's better that they're more on the delusional side. But I agree with you. Do Not Pay, initially, we got an acquisition offer for a million from like one of these OG legal tech companies when we just started. I was about to take it. So I agree that you never kind of realize how big things can be.

• 30:28Harry Stebbings?

  Why did you not take it? A million pounds, you're very young, probably a teenager. Why did you not?

• 30:32Speaker 00

  I asked a lot of people I knew for advice and they kind of laughed at me. And I was actually really upset with them for like not kind of validating this achievement that we got this, it was actually a million dollar acquisition offer. That was a bit depressing, but I think they actually gave me like good advice, which is you can do better than this.

• 30:50Harry Stebbings?

  You said they kind of, you went to mentors. What advice would you have or what thoughts do you have on the value of mentorship? And how young people should seek out the right people to surround themselves with?

• 31:01Speaker 00

  One should create their own luck and meet as many peers as possible. Because you get different things from different people. One person is an expert at growth. One person is an expert at fundraising. One person is an expert at life. Cliff, who introduced us, I think he's an expert at life.

• 31:16Harry Stebbings?

  I totally agree with you. In terms of the people that you surround yourself with and learning from their different skills, talk to me about deciding to be a Thiel fellow and how that came about. Because that was a significant turning point.

• 31:27Speaker 00

  Yeah, so I was at Stanford and to graduate at Stanford, like many universities, they have diversity requirements. You have to do various things in the curriculum to get your degree. And one thing you have to do is it's called creative expression. And I'm not sure how I seem, but I'm not the most creative person. I'm more of a Claude Code style person. I love the code. This was the last requirement I had. And the easiest way to satisfy this requirement was to go to dance class once a week. There's this famous class at Stanford called Social Dance. It was a 9AM. It was like a schlep. And Do Not Pay servers were crashing. And I really am very bad at dancing. So I had a like decision to make. Did I want to go to this dance class?

• 32:10Speaker 00

  Or did I want to keep my business up for millions of users? I didn't go to the dance class. I kept Do Not Pay running, failed out the dance class. And that was my kind of precipitated my dropping out, not the Teal Fellowship. And I actually got the Teal Fellowship a few weeks later. The Teal Fellowship, the best thing about it is you have nineteen other people who also have these dance class style problems, who have the same problems as me as an entrepreneur. Like, one example would be, how can you convince a sixty year old to work for you? At the time, Do Not Pay was very early in the machine learning days. We were trying to do some machine learning classification for parking tickets. And I was trying to get one of these old, like OG, machine learning people to work for the company. I was turning to one of my Stanford dorm mates,

• 32:55Speaker 00

  who was also trying to do apps and projects, but he was more a committed college student. And I said, do you have any idea about how I can convince this person to work for me? And he had no idea, rightly so, because he was like dealing with his own college problems versus building a company. So I think the biggest benefit of the Teal Fellowship is having nineteen other young people who are dealing with the same challenges as you. And I went to the first Teal Fellowship retreat. And back then, they made you share rooms. Now Peter Teal is so wealthy, if you go on the retreat, they actually give you your own room. But back then, you had to share rooms with the other fellows.

• 33:28Harry Stebbings?

  It's getting too luxurious these days.

• 33:29Speaker 00

  And my roommate was a fellow Brit. I guess they put the two Brits together. He went on to found a company called Fluidstack, which is publicly reported to be a tens of billions kind of company. And so just having those peers is absolutely incredible.

• 33:44Harry Stebbings?

  And so when we look at the Teal Fellowship, what do you think made it so successful when you look back?

• 33:50Speaker 00

  I think not being transactional. It's a price, so it goes to the individual as a price. And you can do anything you want with the prize money. You can use it on research, on how to grow organs. You can invest it, like I did in my Teal Fellow classmates.

• 34:05Harry Stebbings?

  Is that what you used it for?

• 34:06Speaker 00

  Yeah, I put all my Teal Fellowship money and I invested it in Adam Guild and other amazing entrepreneurs. That's how I started investing. Maybe I'm an investor at heart in some ways, because that's what I did.

• 34:18Harry Stebbings?

  That's fucking wild. I had no idea. So they give you 200 grand?

• 34:22Speaker 00

  So back in my day, before the hyperinflation, I'm getting old, it was 100K. Then last year was 200K, now it's 250K. So it's going up.

• 34:30Harry Stebbings?

  And so then you get 100K?

• 34:32Speaker 00

  Yeah.

• 34:33Harry Stebbings?

  And you're like, wow, the people I'm with are really good too. I'm going to invest in 10, 10Ks.

• 34:38Speaker 00

  So they have this tradition where obviously the ultimate decision on who gets the fellowship is up to the foundation and Peter finally. But fellows help out every year in the selection in various ways. And I was helping out one year and I was actually interviewing fellows for the next class. And that's how I met a lot of these people.

• 34:56Harry Stebbings?

  That is absolutely wild. Did you do the same size check into each? I'm just intrigued.

• 35:01Speaker 00

  No. So they pay it in installments. Because I guess they think these crazy young people, we don't want to give them 250K at once, they might like buy drugs or something. Probably not, but do some crazy stuff. So at least with me, they gave it to me in installments. So I took all my first installment and just put it into him.

• 35:20Harry Stebbings?

  Into Adam?

• 35:20Speaker 00

  Yeah.

• 35:21Harry Stebbings?

  Wow. Okay, so of the 100K, what do you think you've turned the 100K into on paper?

• 35:27Speaker 00

  I think when it's all said and done, it'll be in the eight figures.

• 35:30Harry Stebbings?

  Wow.

• 35:31Speaker 00

  That's why I started my fund because I, and I did other investments as well that did very well. I also invested in my, going back to my Stanford roommate, Justin, and various other ones at the time.

• 35:44Harry Stebbings?

  What did Justin do?

• 35:45Speaker 00

  He's building insurance claims processing software.

• 35:47Harry Stebbings?

  Assured. Yeah.

• 35:48Speaker 00

  Lots of deals like that. And so I thought, okay, I'm out of my TL fellowship money. Maybe I should raise a small fund to keep this going because it pays to be early.

• 35:57Harry Stebbings?

  100% pays to be early. That is absolutely amazing. It's the first, before we move on to investing in the first funds in that way. You're on the selection committee also for the TL fellowship?

• 36:06Speaker 00

  So it's ultimately up to the fellowship to decide, but I help out.

• 36:09Harry Stebbings?

  How has what you look for and they look for changed over the years?

• 36:14Speaker 00

  So when the Teal Fellowship started, it was really about backing incredible, incredible individuals out of distribution individuals. Dylan Field was working on a photo sharing app, and then I think some drone ideas. Vitalik was just a crazy individual doing crypto, which was not exciting at the time. And it was really about the individual. In the kind of late 2010s, a flood of people were applying to the Teal Fellowship with huge external validation. But now, I think it's going back to really focusing on the individual.

• 36:46Harry Stebbings?

  We said there about the external validation and kind of some group-like thinking. I am interested because often, I don't know how to put it, but like the Teal Fellowship and say like a YC are compared in the same bucket. How do you advise founders on the value of YC today and how they should think about that?

• 37:04Speaker 00

  Every founder needs some first believer, whether it's Taking My Spare Bedroom or the amazing programs out there. I really think you need a first believer and YC can be a great first believer for them. Some companies do better in YC than others. The problem with any accelerator, not speaking specifically about YC, is you're competing for attention with all the other companies in the accelerator. If you're the top of the accelerator, then that's incredible. You're the king maid or queen maid company. If you're like a middling company, it might actually be better to not be compared to all those other companies. And going back to My Spare Bedroom, it's a supply constraint. There's only one spare bedroom. And so it actually is a bar for me, is like, do I want to put these people in my spare bedroom?

• 37:47Speaker 00

  And there's only one, so all my focus is on them, so there's no dilution in terms of the brand. I'm not doing 100 companies in my spare bedroom. In fact, one of my LPs asked me, why don't you start buying a hotel or rent out a hotel and just do 10 at a time? And I said, well, that removes the artificial constraint of one. And so I think that's why I try and be different, is like a one-person accelerator.

• 38:08Harry Stebbings?

  I have an unwavering man crush on Matthew McConaughey. He actually says something brilliant, which is limitations reveal style.

• 38:15Speaker 00

  Yeah.

• 38:16Harry Stebbings?

  And I think it's very much aligned here to the constraints of your... I would love to partner with you, Josh, and say, hey, this is the content marketer with me, hey, could we get like a house and do Founder House and do five or six and turn it also into a content business?

• 38:30Speaker 00

  So I was thinking of buying the Facebook house. It's actually not that expensive house, the actual house where Facebook started. And when I was starting Do Not Pay, I didn't know it was a Facebook house. The first I found out it was a Facebook house is there's a bus of tourists from Asia who would show up at the house. And it would be like Avenue of the Stars, like I guess growing up would visit LA and you'd like go on a bus with all the stars. And this was like on the tour route. And this bus showed up of these tourists. And I said, what are you here for? And they said, we're here to see Mark Zuckerberg's house. I immediately thought, I guess this is the content marketer in me. You can come in, but you have to subscribe to Do Not Pay. We had a Do Not Pay employee outside with a clipboard. And to enter the house, you actually had to become a Do Not Pay user.

• 39:13Harry Stebbings?

  That is amazing. I'm just wondering, what are the limitations on expansion for you? The one bedroom was, could it be three? Could it be six?

• 39:23Speaker 00

  Such an LP question. I think.

• 39:27Harry Stebbings?

  Thanks, Josh.

• 39:28Speaker 00

  I think you should start a fund of funds. You have amazing judgment. I think there's something special about one.

• 39:35Harry Stebbings?

  How long are they in there for?

• 39:36Speaker 00

  As long as it takes. Hotel California, they can't check out until they're in a stable spot. Usually that's a few weeks.

• 39:42Harry Stebbings?

  Usually a few weeks?

• 39:43Speaker 00

  Yeah.

• 39:44Harry Stebbings?

  Wow. Okay. And so you'll tee them up then for a round? And so you'll introduce them to...

• 39:48Speaker 00

  Maybe a traditional pre-seed or seed, yeah.

• 39:50Harry Stebbings?

  And so you'll introduce them to 10 to 15 reseeds?

• 39:52Speaker 00

  Yeah. And I will go very personally to do everything to help them. So oftentimes this arbitrage is I'm moving them internationally. I will put their O1 Genius Visa on my credit card. I'll use all my social capital to introduce them to whoever it takes. I had one person, he was building in data centers. I phoned up my old friend Jamie and introduced him to Jamie from Fluid Stack. Do anything, anything possible to kind of build up credibility, build their team and get them in a stable spot.

• 40:20Harry Stebbings?

  I absolutely love that. It's so rare to meet someone like that. And it's so rare to be able to do that because most people run portfolios and you just don't have that. Can I ask you a tough one, which is like, have you ever lost belief when you've seen them in the first few weeks?

• 40:33Speaker 00

  No, I've never lost belief in someone who stayed with me. I think there's enough filters before that. The opposite is true. I've accosted them at 2:00 AM while they're sitting on my couch. I'm like, I want to put in another 300K.

• 40:48Speaker 00

  It's difficult to say no.

• 40:50Harry Stebbings?

  Yeah, you're staying in my house. Do you want to stay tonight?

• 40:53Speaker 00

  Yeah.

• 40:53Harry Stebbings?

  That is amazing. I love that. And so you go to the 10 to 15. Is it always the 10 to 15 that are the same? Do you tailor it to, oh, well, you're doing X and you're doing Y, so this should be different for you?

• 41:04Speaker 00

  Yeah, some are off to the races. So some, I introduce them to a top three firm and they get it. And then they're like, and it's actually going back to, it's actually sickening. Once they get the top three firm, it's like a stampede. It's like safari stampede. Everyone is trying to invest. And I was thinking, where were all these people just three weeks ago? Sometimes they require a bit more time and then maybe I bring in a sector expert. Like if they're doing government, I bring in a top government VC. Or if they're doing consumer, I bring in consumer. Sometimes it takes longer, but I always get them in a stable spot and it depends on the company.

• 41:36Harry Stebbings?

  Are you able to predict the ones that will be hot versus not?

• 41:40Speaker 00

  No, the opposite is true, actually. The crazier it is, the better they do. Ali Ansari is a micro one, is objectively my best performing investment in terms of multiple. The founders get upset when I reveal exact valuation numbers, but let's say over a thousand X, well over a thousand X, and based on the kind of the scale of the business. When I met him, I said, I'll invest only on three conditions. So it was a California LLC, uninvestable. It has to be Delaware C corp. He was based in kind of Los Angeles as a solo founder and he was running a kind of a staffing business, which there's a million staffing companies, even in the UK. So I said, you have to move to the Bay Area. You can live in my spare bedroom.

• 42:22Speaker 00

  You have to reincorporate in Delaware or shift to Delaware and you have to do a software style product. I don't mind what you do, but it can be anything. We grinded and he's the hardest, one of the hardest working people I've ever seen. And actually, he still lives in my building to this day and I like come at 12 AM and he's like working middle of the night. And he did all those three things and it changed everything.

• 42:43Harry Stebbings?

  Dude, what did you see in him? I don't mean that rudely to Ali. I've seen actually interviews. He's clearly brilliant now, but you learn and develop. Staffing business? How, I'm sorry to be rude, how uninteresting. As you said, there's millions of them. What did you see in him that made you so convinced that he would pivot, change the company location, change his location?

• 43:01Speaker 00

  Never give up. If you back someone who's above average IQ, very smart, and never give up, of course they'll succeed. And I think this is actually a mistake a lot of VCs are making. They are focusing too much on these credentials. So there's a race right now to back the math Olympiads. VCs are like going to spelling bees and math competitions in high school. And I think IQ is very important. You need someone smart, but much more important is they'll never give up. And I could tell from my own journey and interviewing people for the Thiel Fellowship and seeing so many founders, that Ali was someone who has never give up. And he's overcome huge challenges along the way to kind of build his business.

• 43:41Harry Stebbings?

  Do you agree with Ken Griffin? He said on the weekend that he likes athletes with above average IQ.

• 43:46Speaker 00

  Yes, I would agree with that. I think athletes is one form of never giving up. And you can kind of tell a huge chip on your shoulder is another way. There are so many.

• 43:56Harry Stebbings?

  We said there about Mike, Ron, Ali. Take me to that then. Like, so he's in the house and then he's going out to raise. You're introducing him to VCs. How was that first round?

• 44:03Speaker 00

  I think that once the minor things get sorted, it's actually quite, there's so much money. People ask me, are you worried about competition from XYZ B5 seed firm? I'm like, no, they're helpful. They can kind of join these companies and babysit them. And so once these minor things are sorted, it becomes legible fairly quickly, not for like a unicorn, but certainly for an institutional seed.

• 44:27Harry Stebbings?

  How much weight do you put on the idea? To your point on like Ali where his never give up and a staffing business, awful.

• 44:35Speaker 00

  So this is the biggest mistake I think I've made as an investor over the years, which is as an investor and entrepreneur, my imagination can run wild as to what they can build. I think if only they did this, it would be huge. The problem with that is unless it comes from them, it's not their life's work. And so I'm very cautious. I have a rule, I never tell the entrepreneurs what to build, which which might seem surprising as an investor. I say to them, it's your job to build the product and get customers. I can help with everything else. So I never index too much about the idea, it's about the person. With that said, there's a few things that I'll never touch. I'll never touch crypto. I'm not getting into whether I believe in crypto or not. I think it has huge use cases, but I think it's best left to the crypto funds.

• 45:17Speaker 00

  Consumer hardware is tough because of various different consumer hardware issues. So I try and stay away from that, at least from my fund. But beyond that, anything and wet sciences, well, stay away from that.

• 45:28Harry Stebbings?

  For me, it's specifically about biotech and life sciences, where it's like, it's far too intellectual for me. And it's like Atlas exists for a reason. You should go and see them.

• 45:36Speaker 00

  Yeah, I'm not a scientist.

• 45:37Harry Stebbings?

  Has what you need changed? I would say, again, the show is successful because I'm very open. I would say we as a firm are struggling to make the transition between what was good. One to five million good enterprise clients to what is expected now, which is in a logora, one to a hundred million in eighteen months. Lovable, one to a hundred and fifteen months. Has what you need to see changed?

• 46:03Speaker 00

  No, I'm more excited than ever. Everyone is pitching this AI infrastructure nonsense. We're building agent, observability, like the jargon levels. I'm British. I think this all BS. Like they just add on the jargon. I love people building real businesses, so the more real it is, the better.

• 46:20Harry Stebbings?

  What's real?

• 46:22Speaker 00

  So, and I think enterprise AI is really exciting, like Assured or Owner or Micro One, things like that.

• 46:29Harry Stebbings?

  And what you mean by that, just so I understand, is like, I sell a product that people pay for. And it's a simple transaction in that way, not the market will move towards our way of seeing data access for agents.

• 46:41Speaker 00

  If you can't explain the business to someone at the pub in the UK, like if you go to a pub and say, I'm building observability for AI agents, they'll laugh at you. But if you say, I'm building software to automate health insurance claims, that makes sense.

• 46:57Harry Stebbings?

  When we go back to the alleys and the micro ones for the fundraise, what do you advise founders when they get multiple term sheets and the heat is on?

• 47:05Speaker 00

  There's kind of two groups of firms. There's like the kingmaker firms that you should accept at any price. One example would be Founders Fund or Sequoia or people like that. And so if you get an offer from them at X and the offer from someone else is at 2X, you should take their offer because even if you're maximizing amount raised and minimizing dilution, in the long run, you're king made and it will save you in the next round. But another mistake these entrepreneurs make is they have the list of the kingmaker firms is too big. There's probably like some tier two firm that think very highly of themselves that aren't in that same level as Founders Fund or Sequoia.

• 47:43Harry Stebbings?

  No tier two firm thinks they're tier two, to be very clear.

• 47:48Harry Stebbings?

  Can I ask if I were to put the pressure on and say you can have three firms in tier one and three only, what would they be?

• 47:58Speaker 00

  No, it depends on the sector. It really depends on the sector. Like if you're a consumer company, getting Forerunner could be the kingmaking thing. Generally, it could be Founders Fund or Sequoia or something. So that's a very diplomatic answer.

• 48:10Harry Stebbings?

  That's a very diplomatic answer. I often think that kingmaking exists, very candidly. Do you agree that kingmaking exists? You said it a couple of times.

• 48:18Speaker 00

  A hundred percent. We live in such a noisy world that people outsource their judgment to established brands.

• 48:23Harry Stebbings?

  The thing I think you've also seen that people really don't anticipate is how kingmaking really correlates to customer adoption. And what I mean by that is if you look at and you ask Winston at Harvey or Max at Legora, a big part of their customer acquisition is relying on their venture investors to bring mega law firms. It is a revenue generator.

• 48:43Speaker 00

  Yeah, and it's not just law firms. Even consumers who use Do Not Pay. I think I'm sure lots of people have signed up because of the investors that backed us.

• 48:51Harry Stebbings?

  You mentioned the word dilution there. I'm seeing more and more founders who are like, oh, I'm being very dilution sensitive with this round and it's often very early rounds. They'll do 5%, maybe 10% dilution on a seed round or a pre-seed round, where it used to be 15, 20. That's hard for me as a fund. What do you advise founders on dilution sensitivity from your lessons and observations?

• 49:13Speaker 00

  I think it's nonsense. I think they shouldn't do something stupid like sell 50% of their company to a Midwest angel for like 100K like you see with some of these Shark Tank deals. But at the same time, the number one thing I say to especially these young founders I back is either it succeeds or it doesn't. If it succeeds, at a minimum, you're worth hundreds of millions or billions. You're on the cover of magazines. It's life-changing. If it fails, you're nothing. So if taking that extra money can reduce the chance of failure by even 5%, the kind of expected value is infinity in terms of life improvement. 5% of infinity, you should still do it.

• 49:51Harry Stebbings?

  For you as an investor, dilution is real. I mean, we're seeing on Anthropic, I think, the Series A round is a 92% dilution. Astonishing. Never seen such levels of dilution. For you as an investor with subsequent rounds, do you do reserves? Do you do them from the fund? How do you think about that?

• 50:07Speaker 00

  I'm on my fourth fund. My first three funds, I did do reserves and I did some great reserve investments. Like, for example, I did a very hummingbird style investment. I put 15% of my third fund in owner at the Series A. That fund has Micro One, lots of other good things. So that will be a very good fund because of that reserve investment and also because of these precedes.

• 50:25Harry Stebbings?

  You just, let's pause on that. You put 15% into owner. 15% for people now is an extraordinarily large, it's almost double.

• 50:32Speaker 00

  Of my third fund, yeah.

• 50:32Harry Stebbings?

  Normally, I would never go above 7%. So you're doing 15. What did you see that gave you the unwavering conviction to put 15% in?

• 50:39Speaker 00

  So in the private markets, there's no insider information. Speaking generally, all of these founders are like my good friends. I speak to them sometimes at 2am. And so if you can build that depth of relationship and conviction, it's a kind of adverse, kind of positive selection through that kind of relationship that you can build with the founders. You can tell if it's real, because I'm not a professional investor. And I'm sure you'll ask me about being a founder versus investor. I think people consider me as a founder and that's a unique edge. Anyway, going back to your question. So that was a good investment, but I realized the opportunity cost of that investment, given the, where I come in. It could be 20 to 30 precedes. And the value creation at the preseed

• 51:20Speaker 00

  is so high that I decided for my fourth fund, no reserves, just everything upfront. Browder Hotel, let's go.

• 51:29Harry Stebbings?

  Brava Hotel, let's go. Along the way, you said, hey, you'll be worth hundreds of millions, blah, blah. How do you advise founders on the ability to take secondaries off the table early? We're seeing it more and more earlier and earlier. How do you advise them?

• 51:42Speaker 00

  The people buying these secondaries are shocks. If someone is emailing you asking to buy Anthropic shares, the value of Anthropic is probably going to go up. And the same is true with these founders. And so I would say to them, if you're being bombarded with secondary offers, perhaps they have more experience with the market than even you do as a founder of your own business. I think a lot of founders, they've regretted, a lot of my friends, they've regretted taking secondaries. They've got one of these kingmaker firms in, and then the valuation has gone up 3X in a few weeks. So why not do the secondary at the higher price? So I would say if it's too much inbound, they could be something that they have within their investing experience that as a founder, maybe it's their first time business, they

• 52:26Speaker 00

  maybe shouldn't jump to sell too quickly.

• 52:29Harry Stebbings?

  Did you sell secondaries?

• 52:31Speaker 00

  I do not pay. We haven't really had to because of dividends, which is a whole nother thing.

• 52:36Harry Stebbings?

  It is a whole nother thing. I just wonder, do you think richer investors make better investors? And my theory around this is like, a Sequoia, for example, is not worried about an LP questioning their investment strategy. They're not worried about losing a company even. They're not going to get fined for losing a $20 million cheque. A firm that is more worried or probably needs the money more is going to worry about their next fund, is going to worry about losing, and they don't have that upside maximization.

• 53:06Speaker 00

  Yeah, I'll give you a classic example of how this impacts decision making, which is safes versus priced rounds. As a pre-seed and seed investor, the kind of B minus VC investors will want to get that next round on a priced basis to get that gap markup. But if you actually care about the economics and making money in the long term, you want the next round on a safe because safes don't dilute other safes. And so I was actually talking to a seed investor about this, and I said to them, why don't everyone just encourage more safes? Safes are beneficial for founders because they can raise more quickly and all of this stuff. And they said, no, but they want to get the price round to the raise their next fund. So I think this raising the next fund nonsense really does impact decision making, and it actually directly hurts founders with some of these things.

• 53:50Harry Stebbings?

  Does the safe on safe on safe not actually ultimately hurt the founder when it ultimately converts? And it's kind of like a delayed debt that you ultimately have to cash in your chips for?

• 53:58Speaker 00

  Well, the VCs always win. If they do a price round, some of them are shocks. They say, we want a 15% option pool at the seed. So the safe, you can just pursue the existing option pool and wait till the company becomes more valuable. But I'm biased.

• 54:12Harry Stebbings?

  VCs are shocks. I love that. It's a good title. What other ways do you advise founders to just be mindful of a shock like mentality from VCs?

• 54:21Speaker 00

  So I say to the young founders, the VCs will say anything to get you to sign right there and then, anything. They'll reverse engineer what the founder is looking for and say, oh, I'm friends, I'm buddies with that guy. I know someone at that company with golf buddies. I can get him to spear a customer. Like right now, I can introduce you to so many customers and they just say exactly what the founders want to hear. And these poor young founders, they're so impressionable, sometimes they sign the safe on the spot. Afterwards, of course, it never materializes. They never get that customer that they were wanting because it turns out they weren't as close golf buddies as the person made it out. So I say to founders, do not sign on the spot. And going back to my office, I don't make them sign on the spot. It's just too much, especially for these young founders. I say, you have the night to think about it.

• 55:06Speaker 00

  I think decisiveness is a key quality, so I do want to know by the next morning. If not, it's done, but they can't sign on the spot.

• 55:12Harry Stebbings?

  I freaking hate this. I'm running a process. I'm collecting term sheets and I'll let you know by Friday evening. The same with everyone else. That is an awful feeling, way to do business.

• 55:23Speaker 00

  Either a hell yes or a hell no.

• 55:25Harry Stebbings?

  So what would you, genuinely, I'm not asking you advice. What would you say to me I should do when a founder says, we're collecting term sheets. We so appreciate your belief in us, but we'll let you know on Friday?

• 55:36Speaker 00

  I say it's probably not a fit, especially given my investing model. I want to, so many ways to win. I'm sure that they might win or not, but that's not a fit for me. I say, good luck.

• 55:46Harry Stebbings?

  So when you advise founders on that selection process and they say, I've got a term sheet, blah, blah, blah. You guys then sit over dinner and talk about it. You won't run a process?

• 55:56Speaker 00

  Yeah, no, I definitely not. If they're running a process as too, I want to help them with that process. And I'm very collaborative. I typically take five to seven percent. I say to them, and I really think this has proven true, I will save them that over the life of the company. Even if they have the most top tier people, I will save them that through various founder tactics. Helping founders at 2AM even raise their Series C. It never ends. I will make it worth it for them. It's not like I'm trying to get like 25% of these founders.

• 56:24Harry Stebbings?

  How do you advise them on price optimization?

• 56:27Speaker 00

  I tell them the market sets the price and it is price optimization is a function of how many offers you have. So you should never say what price you want. And of course, they ignore my advice and then they get hit with, oh, I'm past because the price is too high, when the VC would probably would have given them an offer and that would have actually helped improve the price.

• 56:44Harry Stebbings?

  You mentioned the dividend element there of Do Not Pay. Do Not Pay is such a fascinating business, especially in the way that you've run it. Can you explain to me how many people are at Do Not Pay, why it's not the traditional venture business that bluntly loses money, is reliant on the next round desperately? Just tell me about that before I dive into it.

• 57:02Speaker 00

  Do Not Pay in some ways is a media business. We get 90% plus of our customers organically through SEO, earned media, like viral stories and referrals. And so we're not playing the meta, spend 100K a month on meta game that some other founders are playing. And that is a double edged sword. It has positives and negatives. The positives are it's extremely efficient and profitable. We have hundreds of thousands of customers and it's only a team of 11 people. It's automated, fully automated, so it's like very efficient. The downside is we can't just decide to dump a million into meta ads and grow by X percent. And so the organic is kind of a ceiling. Another ceiling is that, coming from the

• 57:44Speaker 00

  UK, I've always wanted to build a real business. We had a competitor in the 2021 peak, they were spending like $300 to acquire a customer worth $150. And they actually managed to sell at the peak of the market. Good for them. I can't play these games. I think that the best thing is to actually build a real business.

• 58:03Harry Stebbings?

  Good for them indeed. Do you worry with the reliance on SEO with that golden goose potentially being threatened? I had the CEO of Monday.com, Aran, on the show. And he said, I think that their SEO performance had gone down by 15%, which doesn't sound huge, but at the scale of Monday.com, it's $100 million plus. Do you worry about SEO being potentially damaged?

• 58:21Speaker 00

  So GEO, the AI version of SEO is rising in parallel. So we're not too worried that people will always rely on some acquisition channel. Fortunately for us, we haven't yet seen it because one of my life philosophies is the world doesn't move at the pace of San Francisco. A lot of our customers are from middle America and actually the UK. I mean, Google is still huge. So it'll take a while, but we are definitely ensuring ourselves with lots of GEO related strategy.

• 58:49Harry Stebbings?

  Was there a moment where you're like, we're not a traditional VC company and I'm not going to go down this route of like raise, raise, raise, headcount, rah rah?

• 58:58Speaker 00

  I think from the very beginning, we were always, I mean, the clue is in the name, do not pay. I joke, it's not just a company, it's a lifestyle. I'm like, Mr. Do Not Pay. And so we never wanted to do anything stupid. And when I was hiring my friends, I was always hiring the people who were like browsing Reddit at 2am, trying to save money. I think this is controversial. I think founders who burn all the money, I think that's not cool. I think it's kind of lame because why did they run out of money? Why didn't they just cut the burn? And obviously some founders fail because of some like black swan event and I can understand that. They take a massive swing and there's like back, like some huge litigation or something, like a patent thing that Apple crushes them or something. That makes sense. But if they just run out of the money, that's not cool. That's kind of lame. They should have just managed their burn better.

• 59:43Harry Stebbings?

  The dividends, how does that work? Basically, we're so profitable, we just dividend now.

• 59:47Speaker 00

  So we have more money than we've raised and we're actually doing another dividend next month. So it's like quarterly. We're, yeah, we're planning on doing it now quarterly. And the investors, I think it works for us because the investors got in at such low prices. We never, we didn't raise a hundred million. We could have at the peak of 2021.

• 1:00:04Harry Stebbings?

  You raised 22?

• 1:00:05Speaker 00

  Yeah, which when I was fresh off the boat from the UK, dropping out of college, that seemed like the world of money. But in the grand scheme of things, given the scale of our business, it's not actually that much money.

• 1:00:15Harry Stebbings?

  Do you worry that your VCs, you're not a success? And I didn't mean that badly, but just like, you know, as well as I do, we look for fund returners. You're not going to dividend your way to a fund return.

• 1:00:24Speaker 00

  We are going to take some big swings this year. We are looking to kind of roll up some different consumer things within Do Not Pay. I'm still 10 years in, still extremely excited and ambitious. Who knows?

• 1:00:37Harry Stebbings?

  You said about hiring friends.

• 1:00:38Speaker 00

  Yeah.

• 1:00:39Harry Stebbings?

  How do you advise founders on how to build the best first five to 10 people?

• 1:00:45Speaker 00

  Well, I think business school is actually a counter signal. I'm not going to be very popular among the business school people, but.

• 1:00:51Harry Stebbings?

  I agree 100%. My favorite is when it's like in the LinkedIn title though.

• 1:00:54Speaker 00

  Yeah. So stay away from the strategy hires. Strategy is a meaningless hire because. What does that even mean? Everything is strategic. I think connection to the problem is really important, similar to investing. Do not pay employees, they're auto scaling themselves. Like, we had one do not pay employee, he would go to Target, the US retailer, and he'd buy prepaid Visa gift cards so that whenever he would sign up for a free trial, they wouldn't be linked to his direct debit, real payment details.

• 1:01:22Harry Stebbings?

  And we'll use one of your products.

• 1:01:23Speaker 00

  Yeah, that would make a great product. So we're trying to hire people to scale themselves. My very first hire at Do Not Pay, obviously I built the thing myself, the design looked terrible. It gave me a headache. It was like a moving road background. You would look at it and it'd give our early users headaches. We'd get complaints, people would get headaches from the design. So the first hire for me was a designer. So you need to like immediately solve these bottlenecks quickly.

• 1:01:48Harry Stebbings?

  What role does not exist today that you think will be very commonplace within five years?

• 1:01:53Speaker 00

  I think custom evals. Everyone is very excited about foundation models, like Claude Code and all of this stuff. The future of AI will actually be organization specific, specifically around the data that Do Not Pay has, where we're doing evals on our own data. So I think custom eval hires will be really big.

• 1:02:13Harry Stebbings?

  Do you worry about the concentration of value to very few numbers of companies? If you look at where markets think valuations will go and where companies will go, it looks more and more like eight companies will take $5 trillion plus of market cap and actually could eat up large parts of the software market in some respects.

• 1:02:33Speaker 00

  I think there'll be a rise of medium-sized businesses, like almost Do Not Pays, that fill the niche, and then these massive companies. But the middle, where there's just like a large company, I think they have to be very worried. I was saying to a friend, for every anthropic employee who's making 20 to 100 million, there's 7,000 block employees being laid off. I think there is a huge transfer going on between the extremely large companies and the quite large companies. But I think the smaller ones will still have a role.

• 1:03:04Harry Stebbings?

  Do you worry about what happens to San Francisco? When you have, I think it was announced this morning, 600 OpenAI employees that took out an average of $11 million.

• 1:03:13Speaker 00

  I I think there's a lot of pain happening in San Francisco at the same time. I think a lot of Metta employees are being laid off, a lot of big tech employees are being laid off. I think there's like two types of goods. There's like absolute goods, like a standard apartment or some food and things like that. And I think that the price of that will stay the same. But then there's like positional goods. There's only like eight seats in Delta first class. There's only eight houses where they wanna buy like on the best road in San Francisco. And the positional goods will just go off the charts. So if you're someone who values your success in life by attaining positional goods, like one of the eight houses that everyone wants to be in, good luck.

• 1:03:52Harry Stebbings?

  I I suppose to so many of the founders that you work with, um, most of them said about buying land as something that we should talk about, which I was not expecting by any. And when the foot, when I think that actually Greta said it, we were talking, I was like, he buys land? Why do you buy land, Josh?

• 1:04:09Speaker 00

  In terms of like my diversification, retirement, I take all the money I make and I buy land. I don't put it in the stock market. I don't keep it in cash because I think the dollar is, it doesn't have a good future. I don't buy bonds or anything like that, and I buy land. It could be being British, uh, there's a famous quote from Winston Churchill, land is the only scarce resource. And I think I'm diversifying on two outcomes. The first outcome is that AI creates like a post-economic world where it replaces all big companies and the only thing that's that's scarce that's left is land. And so AI doing extremely well, land can still be valuable. And then the second is maybe, maybe it's all a bubble and all of tech goes to zero,

• 1:04:54Speaker 00

  but land will still be valuable. And the land I buy is in Nevada, far away from the tech bubble. It has like nail salons and all sorts of things, it's passive investment. And it's just diversification for like the AI, the various outcomes that will happen with AI.

• 1:05:09Harry Stebbings?

  Why Nevada?

• 1:05:10Speaker 00

  I think there's like secular trends regarding it being very pro-business, population growth. Three things are true in Nevada. There's no state income tax, there's very low property tax, and it has a rising population. That is not true, in my opinion, anywhere else in the US. So if you compare it to Florida, for example, there is no state income tax, but very high property tax.

• 1:05:31Harry Stebbings?

  Do you worry about the rising hatred towards the super rich in the US?

• 1:05:36Speaker 00

  It's not sustainable. You can't have 50,000 people with all the money. I think actually there could be a revolution in our lifetime. Something has to change.

• 1:05:43Harry Stebbings?

  It's my biggest worry, actually, today. You see it in the UK too. We all sit here in the bubble of London.

• 1:05:48Speaker 00

  Yeah.

• 1:05:49Harry Stebbings?

  You know, 33% of children today in the UK grow up in poverty. It's an astonishing fact. What do you think happens in that respect? Is that just social revolution and unrest?

• 1:05:58Speaker 00

  I'm an optimist. I think that the jobs that will exist in 20 years, we couldn't even imagine what jobs would exist. Like AI data cleaning, like these companies like Mark or Micro One, those jobs didn't even exist five years ago. And I think similarly, AI will create a huge number of jobs, maybe working in air conditioning in data centers and all of that stuff. The problem is there'll be a shift in the economy and people will have to transition. And I think the government will have to get a lot better at helping people transition.

• 1:06:25Harry Stebbings?

  Has Trump been better for business for you?

• 1:06:28Speaker 00

  Absolutely. I think that whether you agree or disagree with what's going on right now, it's objective that for tech, the current administration is a lot better. Lina Khan, in my view, is evil. Several companies I invested in had their acquisitions blocked by the kind of Lina Khan style approach. The worst kind of Lina Khan story I heard is there's like a biotech company that was being acquired by a much larger kind of pharmaceutical company. And Lina Khan's FTC blocked the acquisition and the drug didn't get developed. And to this day, 50 people die a year because of the acquisition being blocked. So I actually think that the kind of tech policies of the last administration were not very good.

• 1:07:08Harry Stebbings?

  You said the dollar maybe doesn't have the good future. I put a lot of my money in dollars. Why not? Why should I think differently?

• 1:07:16Speaker 00

  I think that inflation every year is just going crazy and it's just going to get worse. House prices in SF seem to be doubling. Things are not what they used to be. And the only way to stay ahead in this AI world is to have real assets.

• 1:07:29Harry Stebbings?

  When you look at real assets, so like, what is your IRR on like a, or return profile on a land in Nevada?

• 1:07:37Speaker 00

  It's only like ten to twenty percent. It is very safe.

• 1:07:39Harry Stebbings?

  That's better than I thought. For real estate, that's not bad.

• 1:07:42Speaker 00

  Yeah.

• 1:07:43Harry Stebbings?

  Like on a stock portfolio, in a good case, you're like fifteen percent, good case.

• 1:07:47Speaker 00

  There's all sorts of advantages, like you don't have to, you can, there's depreciation and things like that.

• 1:07:52Harry Stebbings?

  Is there anything else you do weird with your money?

• 1:07:54Speaker 00

  No, that's it. And I just set it and forget it with the land.

• 1:07:57Harry Stebbings?

  We mentioned like the pain of big tech and sad to see the layoffs. Was that in your mind just mass overhiring from COVID interest rate times? Or is that actually AI causing efficiencies?

• 1:08:09Speaker 00

  I think it depends on the company. With Meta, I think it's AI driven. There, it's clear that they're spending so much money on their data centers. And AI has made their engineering more productive. They need fewer engineers. But maybe with a company like Block, maybe it's controversial, but I think it's more about the COVID overhiring.

• 1:08:25Harry Stebbings?

  Do you buy that we will have dramatically smaller companies in the future?

• 1:08:29Speaker 00

  Absolutely. It's objective. You don't need, even with do not pay customer support, we're seeing optimizations. Previously, you had to hire like three people to do the job of one person. Now, so we do have like ten extra like contractors for customer support. We, we found that maybe even that, that's too many. Now they press a button and an agent kind of identifies the issue and pre-processes the refund, for example.

• 1:08:52Harry Stebbings?

  What do you think of competitive markets? You mentioned customer support there. You know, there's been fifteen companies that raised over a hundred million. Sierra have just raised at fifteen point nine billion. We mentioned Micro One and McCour earlier. How do you feel about super competitive markets?

• 1:09:06Speaker 00

  All of my best investments have actually been in very competitive markets. Owner as well has dominated a category that's traditionally very competitive. Small business, restaurant, technology. There's a reason it's competitive. The competitive markets tend to be absolutely massive. They tend to have a huge number of customers and that's why everyone is going for them. Going to the kind of data labeling example. It's not unusual for large labs to throw these companies a hundred million, even close to a billion dollar contracts. And so I think there's a reason everyone is excited about it.

• 1:09:37Harry Stebbings?

  Two areas that worry me is like, one, I do do Series A, we lead Series A investments. I think Series A is the worst place to be in the market. Little PMF, like one to three million of revenue, but the price is two hundred X ARR. If you're a million in revenue, it can be a hundred to three, four hundred. My question to you is, do you agree that Series A is the hardest place to be?

• 1:09:57Speaker 00

  I think so, and I think there's this illusion that the valuations are lower than Series A, so it's less risk. But sometimes the best place to be could actually be investing at a billion, where it's de-risked, you can model the cash flows.

• 1:10:10Harry Stebbings?

  I worry about the constraining elements of exits. And what I mean by that is if you look at IPOs today, you can't IPO with less than 500 million in revenue. Constrains what can go out. Big tech is very specific in what they want to acquire. And then tech buyout, the third avenue, honestly is very constrained too. Toma Bravo just lost Medalia. It is a tough market for them to be in. Do you worry about a changing exit landscape constraining?

• 1:10:36Speaker 00

  I think secondaries are an increasing driver of kind of exits. That's why it's helpful to be on the smaller fund size, because it kind of opens up a whole new channel.

• 1:10:46Harry Stebbings?

  Have you done many secondaries from the fund?

• 1:10:48Speaker 00

  We're doing some now, actually. It's a lot easier to do a secondary when you're a friendly pre-seed seed investor than if you're a big firm. If Menlo Ventures sell secondary in a company, the company is dead because the signaling risk is huge, or any firm. But with a seed or pre-seed firm, that's not necessarily true, and the fund sizes are smaller, so it's easier to achieve good outcomes with secondary. So I'm not too worried about it because of the secondary's market, which seems to be more active than ever.

• 1:11:15Harry Stebbings?

  How long ago was your first fund?

• 1:11:17Speaker 00

  2020.

• 1:11:17Harry Stebbings?

  Should you have done them sooner, do you think, knowing what you know now?

• 1:11:21Speaker 00

  Going back to the Sharks thing, when people say that the things that are most attractive to the secondary buyers, you never want to sell, but we're finally selling some now.

• 1:11:30Harry Stebbings?

  Do you worry about the messaging to founders? It's so interesting. I do lots of references on investors when we do calls. As you know, I've never had references like the ones I got on you. It was amazing.

• 1:11:40Speaker 00

  Oh, that's really nice. Thank you.

• 1:11:41Harry Stebbings?

  Do you worry about going to an Adam or an Ali or a Max or Russell at Yuzu and saying you want to sell some?

• 1:11:48Speaker 00

  No, I think it depends. If it's like a small part of one's stake, and the good thing is these things can be sizable and you only sell a small portion, then there's not much signaling risk in that. Additionally, it sometimes helps the founders. Oftentimes, they're so performing so well, their rounds are so oversubscribed, they want to let someone in, and they still have me because I have the rest of my stake, but they can bring in an amazing new name that helps them, maybe someone strategic.

• 1:12:13Harry Stebbings?

  Do you think you will make more money from your investing than you will do not pay?

• 1:12:17Speaker 00

  That's a great... I think unfortunately, I'll make more money from the investing.

• 1:12:23Harry Stebbings?

  Someone said it to me the other day about you. They said you're a generational investor in your approach and mindset. And so they will make more from investing. Wow, that's really interesting. My question to you next is, I don't like it when founders that I invest in are investing heavily. We've seen start funds, raise funds from other people.

• 1:12:43Speaker 00

  Yeah.

• 1:12:43Harry Stebbings?

  How do you feel about that?

• 1:12:45Speaker 00

  I think you always have to remember who believes in you and do right by them, whatever it takes. Some of these companies are up 100x, 1000x. I brought them in alongside me, sometimes direct, not even the SPV, just like direct. They can invest directly. There's a huge amount of overlap between Do Not Pay and my fund in terms of LPs. Like Marc Andreessen is the first believer in both in some ways. So I think you just have to do right by people. I think there's advantages for both LPs and also investing and being a founder at the same time. On the founder's side, I've learned things that I wouldn't learn had I not invested. That's helped Do Not Pay. For example, this whole SEO strategy. And on the investing side, founders love to work with other founders.

• 1:13:29Speaker 00

  They hate professional money managers. So I think it actually makes you a better investor. And you see some of the best investors now, they're also founders like Locky Groom or Delian. One thing I love about tech is you can refer to people by their first names and everyone knows who you're talking about, like Locky or Delian. Yeah.

• 1:13:44Harry Stebbings?

  I completely, yeah, on Locky, it's amazing, you know, especially in, especially when it comes to hardware and robotics. You also become an aspirational check by being a founder, which is like, I have so many robotics founders who are like, I'd love to meet Locky. You don't get that for any other venture firm.

• 1:14:00Speaker 00

  Yeah, and I see that a lot.

• 1:14:01Harry Stebbings?

  What do you think consumers still get most ripped off on that isn't solved?

• 1:14:06Speaker 00

  Definitely bill negotiation. If you phone up the utility company and say you're going to switch to a different internet, they will by default give you a discount. The internet barely works sometimes. They don't credit you properly. So that does number one. I would also say in-flight wifi. We have 100% success rate with in-flight wifi refunds because it works, but it's slow and it's not what they advertise.

• 1:14:28Harry Stebbings?

  Have you tried yours still?

• 1:14:29Speaker 00

  Well, now we're starling that that will finally be solved. I think Do Not Pay is an ETF on the world's problems. And some problems go up, some problems go down. Fortunately for us, the general trend of problems is up.

• 1:14:41Harry Stebbings?

  Do you think chat interface is the right UI for the future of consumer AI?

• 1:14:45Speaker 00

  It's good in some areas, terrible in others. I think for the travel use case, it's terrible. There's a big debate on X going on about this right now. The reason it works for us is you're taking kind of unstructured responses and making them structured. When I started Do Not Pay, I did a Freedom of Information Act request in the UK for the top 12 reasons why parking tickets are cancelled. Poor signage, the parking bay being legally too small, all of the reasons. The reason I did a chatbot is the consumers had no idea which reason to pick. And they'd picked the wrong reason, or they just wouldn't select what was the best thing to pick. So when I did chat, they could write whatever gibberish they wanted, and it would match them to the correct defence. And that was really the unlock of Do Not Pay.

• 1:15:28Harry Stebbings?

  You know, I would love to see you on there, it's like, what do you do? I'm a specialist in like parking ticket refunds. Like world expert.

• 1:15:35Speaker 00

  I was in my high school, that was my reputation.

• 1:15:39Harry Stebbings?

  The final one before we do a quick fire is, you mentioned the UK and growing up in the UK.

• 1:15:43Speaker 00

  Yeah.

• 1:15:44Harry Stebbings?

  Do young founders have to move to Silicon Valley if they want to succeed in building a tech company today?

• 1:15:50Speaker 00

  Okay, so I don't want to denigrate my country too much. I'll say two advantages and then one huge disadvantage. One advantage, it's good to be a big fish in a small pond. Starting out in the UK, it's kind of less competitive for talent, less competitive for media even. Like, anyone can get on the front page of the Daily Mail with the right story. The media in the US is much more jaded, so it's a lot more noisy, a lot more competition. And actually, when I was growing up, the very first thing I did was I created iPhone apps. I built the iPhone app for Pret a Manger, the sandwich chain.

• 1:16:22Harry Stebbings?

  What?

• 1:16:23Speaker 00

  Yeah, I built the official iPhone app for Pret a Manger. I actually did it unofficially. I just made it for fun and then ripped off all the graphics and stuff, and then it eventually became the official app. Did, well, sorry, what happened? They called you and were like, hey, can we, can we? So they didn't realize it was, it was, I was fourteen at the time. They didn't realize it was a fourteen year old behind it and they were considering taking legal action, but they realized that once it was a fourteen year old behind it, it would be a terrible PR thing for Prater Marge to sue a fourteen year old. And so they actually invited me to the headquarters and we made it official app. And that taught me a very valuable lesson growing up, which is it's best to ask for forgiveness versus permission. How much did they pay you for it? Oh, I can't disclose, not, not, it was, you know, it was a huge win for me at the

• 1:17:07Speaker 00

  time, but in the grand scheme of things, it wasn't, wasn't material. That's amazing. What did your parents say? They were, they were, my mother, actually, my, you're the only tech podcast my mother listens to because she really appreciates your wholesome mother content on LinkedIn. She, so she really is a big fan of you. And I'm not just saying that. She's not in the tech world. She, she doesn't really know how to use iPhone or anything like that. She was just worried, you know, as any parent would be. And actually, when I went to meet the CEO of Prater Marge at the headquarters, she was actually worried because I was fourteen, that maybe, you know, it was inappropriate or something. She said, I want to come with you. I said, no, mom, it's a business meeting. She said, no, I have to come with you. I don't want you meeting strangers on your own. So she was more worried about the personal thing.

• 1:17:52Speaker 00

  Anyway, going back to the UK, building an iPhone app at that time in the UK was seen as cutting edge, like whiz kid genius style thing. In the US, people are building iPhone apps every day. And that gives you an idea of why it's better to be a big fish in a small pond, small pond. Second advantage of the UK is that for, for the idea I was working on, like, the UK is repressed, they're a perfect target market for do not pay. I tell people in the US about some of the things that go on in the UK and they're shocked. So one example is the concept of average speed cameras. So I tell my friends in the US, if you drive from here to Birmingham, which is a city north of here, for, for those who don't know, too quickly, it's not about if you go past a speed camera too quickly.

• 1:18:37Speaker 00

  If you get there too quickly, the average speed, they'll give you a ticket. My US friends are shocked by that. They think that's like some sort of surveillance. State and it's true. The UK is like handing out tickets, all these fines, all these environmental regulations. It's just fines, fine topia. So I think for the specific idea, some ideas work better in the UK. And so that's why I started here. So those are the two positives. One huge negative is the scale of ambition in the US is a hundred times bigger. The most successful companies in the UK are in the like tens of billions range like Revolut and think great outcomes like that. In the US, it's in the trillions and it's just an order of magnitude more.

• 1:19:14Harry Stebbings?

  Can I ask you one, which is I think San Francisco is the worst place to start a company today. It is so expensive and difficult to acquire talent. The pool of companies competing for that talent is immense and brilliant. Anthropic product team is brilliant. You're competing for that same talent. It's so expensive to acquire that talent. The duration with which that talent sustains is so much less. You can't build that institutional memory. Am I wrong? And have I been infected by UK advantage virus?

• 1:19:43Speaker 00

  I think you're right in some ways, and there could be an arbitrage where the leadership lives in San Francisco, but you get talent globally. Deal is a great example of that in some ways. I guess it's also New York. But San Francisco has such serendipity. You bump into Sam Altman on the street. I've seen personally seen Sam Altman on the street.

• 1:20:02Harry Stebbings?

  You should start a podcast. You get to interview him personally.

• 1:20:05Speaker 00

  And another thing about San Francisco is it's so boring. All of these people, no one specific, but just all of these people, they're so bored. If you're just like moderately interesting, you can become friends with anyone in San Francisco. It's less stratified. In London, the rich keep to themselves in their fancy clubs. In San Francisco, you can play pickleball with anyone.

• 1:20:26Harry Stebbings?

  That is amazing. And that's very true. Final one, if you were to make a change to like Europe, to make Europe more competitive on a global scale, what would it be?

• 1:20:34Speaker 00

  You have to get rid of these ridiculous regulations. I made a mistake of trying personally to invest in a company in Germany. Oh my God, there's like a no to it. I couldn't, I'm do not pay. I'm an expert in bureaucracy. I didn't want to do it.

• 1:20:48Harry Stebbings?

  Did you end up doing it?

• 1:20:49Speaker 00

  No, I didn't. And also, why are they charging VAT on investments in the UK and some investments? How can you charge a sales tax on investments? Who thinks that's a good idea?

• 1:20:59Harry Stebbings?

  Do you know what, I tried to bring a billionaire once into a deal in Germany. And I had to send out a notary by speedboat. And it cost more than their investment to get their investment done.

• 1:21:12Speaker 00

  That's shocking.

• 1:21:13Harry Stebbings?

  Isn't that bad?

• 1:21:14Speaker 00

  Yeah.

• 1:21:14Harry Stebbings?

  Yeah, yeah, yeah. So I feel your pain. Listen, I want to do a quick fire with you. I've so enjoyed this. So I say a short statement, you give me your immediate thoughts. Sound okay?

• 1:21:22Speaker 00

  Okay.

• 1:21:22Harry Stebbings?

  What have you changed your mind on in the last 12 months?

• 1:21:25Speaker 00

  I think that the AI shift is extremely real. I thought 12 months ago it was a bubble. Now I don't think it's big enough. I think Anthropic will get to a trillion in revenue. I think the value shifting is very real. We're not in a bubble, that's what I think.

• 1:21:42Harry Stebbings?

  If that's the case, why wouldn't you buy the shit out of Nvidia, AMD, Nebius, CoreWeave? My job as an investor is to see ancillary value as well, to appreciate what you just said. And I agree wholeheartedly, and then make more money from it. Why don't you do the same?

• 1:22:00Speaker 00

  I'm very lucky. I do have an investment in Fluid Stack. That's my favorite of the AI infrastructure.

• 1:22:05Harry Stebbings?

  Who's the most underrated CEO operating today?

• 1:22:09Speaker 00

  I would actually say Ali Ansari. I think he's in a very crowded space, but he is a force of nature in terms of execution. Watch this space. I think in the next 12 to 18 months, he's going to be very hyped.

• 1:22:22Harry Stebbings?

  What's your favorite story of serendipity from San Francisco?

• 1:22:27Speaker 00

  There's a class at Stanford. It was only 20 people. I was focused on building my business, not necessarily focused on classes. And it was taught by a billionaire, Pat Hanrahan, who's the founder of Tableau. Just the fact that you can have billionaire professors teaching classes of 20 people is something that wouldn't exist anywhere outside of the Bay Area. And I remember working through a problem set. And he was spending 30 minutes with me, working through this very elementary problem. And I was thinking, why is he spending his time? And I realized it's all about human connection. And he just wants to meet interesting people. And I think the same is true across the Bay Area, where everyone is just a human and you can short circuit the business.

• 1:23:09Speaker 00

  Guards that people put on just by having a human connection with them.

• 1:23:13Harry Stebbings?

  Kind of aligned, but what's the kindest thing anyone's ever done for you?

• 1:23:17Speaker 00

  I have a founder. I don't want to say too many details because I'm under ultra NDA. But I was a personal investment, one of my earliest investments. They lost my money. They went on to start an absolutely blockbuster company. And they gifted me the shares in the blockbuster company. As if I had been an investor at the same price in the blockbuster one. And I think that's a very upstanding thing to do. I think it's almost a very British thing to do.

• 1:23:45Harry Stebbings?

  Extraordinary, but it goes back to the references that I got. What is it that you do, do you think, that makes founders have such a kinship towards you?

• 1:23:54Speaker 00

  I'm not sure. I think I really believe in them. It's so lame, the reasons people invest. Oftentimes, they invest because someone else has invested. Oftentimes, that's like 75% of the time. But I really believe in them to do great things, and I'm their first believer often.

• 1:24:09Harry Stebbings?

  What's the biggest lesson from your father?

• 1:24:11Speaker 00

  Definitely, it puts everything into perspective to just be fearless. I've physically seen the Russians, like they've come to our house, like knocked on the door. That news alert where he was arrested. Growing up through all of that, it puts everything in perspective. And so when maybe like there's a bureaucrat who's upset that I'm getting too many people out of parking tickets or things, it's all noise. It doesn't really matter.

• 1:24:35Harry Stebbings?

  Yeah, it's like, seriously bureaucrat, I've had the Russians, you are nothing. One's worth sitting counsel. You start a new company and you can only have one investor. Who do you have?

• 1:24:45Speaker 00

  I think definitely Mark Andreessen.

• 1:24:47Harry Stebbings?

  What does no one know about Mark that they should know?

• 1:24:50Speaker 00

  I think he is the most curious of the luminaries. I think he spends an immense amount of time reading on X. And people see this when he's liking all of the X posts. But I think that speaks to his curiosity. When I met him, he was referencing obscure tweets and things that are part of my do not page journey. So he really, really reads a lot about everything.

• 1:25:12Harry Stebbings?

  Tell me, final one, what are you most excited for in the next 10 years? For me, you mentioned very kindly my mum. My mum's got MS. I'm very excited for like drug discovery for chronic conditions. What are you most excited about?

• 1:25:24Speaker 00

  I think that they're going to find a cure to a lot of diseases. My grandmother passed away from Alzheimer's and Alzheimer's is like one of the most difficult diseases to crack. And I think AI will hopefully make a big dent in that.

• 1:25:37Harry Stebbings?

  Josh, this has been so much fun. Like, you know, I, I, I love doing what I do, but some are more special than others. Some stories are just more cool than others as well. This has been so good to do. So thank you so much for agreeing to do it.

• 1:25:50Speaker 00

  Thank you.

• 1:25:53Harry Stebbings?

  But before we leave you today, did you know the industry average for booking a business trip is 45 minutes? That's a massive waste of your team's time. Well, with Navan, your employees can book a trip in just seven on average. Navan is the AI-powered travel and expense platform designed for companies that value efficiency. It drives real business impact through high employee adoption and automated policy control. Now, the built-in AI approves in-policy bookings and blocks the rest automatically. This allows finance teams to stop chasing receipts and skip the month-end chaos. And you get this real-time visibility that can save your company up to 15% on your travel budget. And that's why leaders like Visa, Stripe, Figma, and even Anthropic rely on Navan these days.

• 1:26:36Harry Stebbings?

  Go to navan.com/20vc today to see for yourself and you'll get a chance to win two business-class flights anywhere in continental US. No purchase necessary, rules apply. Head over to navan.com/20vc now. Once Navan simplifies the travel, Air Wallet simplifies the spend behind it. Founders, let's get real about the growth tax. You've raised VC funding and you're scaling globally and it's no longer about shipping product. It's about orchestrating operations across continents. But suddenly your payments and finance stack is choking your growth. You're logging into lots of different banking portals, waiting days for transfers and reporting across entities. It's operational drag and it's at your scale. It's costing millions. That's why I'm so excited to partner with Air Wallets.

• 1:27:20Harry Stebbings?

  Air Wallets are more than just a banking alternative to HSBC or Citi. Air Wallets brings you an intelligent financial operating system that powers how global businesses operate and grow, allowing you to manage and automate banking, treasury, payments and spend. Most exciting part for me, they're heavily investing in agentic finance. If you're scaling globally, you need a banking and finance platform that's borderless, real time and intelligent. Check out Air Wallets today and see how they're helping thousands of businesses like Canva, McLaren and Deal. Scale at airwallets.com/20vc. Terms and conditions apply. Your monies are safeguarded, not FSCS protected. See airwallets.com for more details. While Air Wallets helps your money move globally, Vanta helps your security keep up.

• 1:28:05Harry Stebbings?

  Security and compliance done wrong is a giant headache. Security and compliance done right though, well that's Vanta. Vanta helps you earn trust and speed up growth, no spreadsheets required. For startups low on time and resources, Vanta becomes your first security hire. Using AI and automation to get you compliant fast and unblock really big deals. And if you're big enterprises, Vanta is your AI-powered hub for compliance and risk. Bringing together data from across your business and automating workflows so you can prove trust at any moment. Vanta scales with you at every stage. That's why top companies, from startups like Cursor to enterprises like Snowflake, choose Vanta. Do security and compliance right.

• 1:28:47Harry Stebbings?

  My listeners can get $1,000 off Vanta by going to vanta.com/20vc. That's vanta.com/20vc for $1,000 off Vanta.