E429: Dr. V on AI, Market Bubbles & Finding the Next Anthropic

What if the biggest mistake in venture capital is investing in what already looks like a great venture investment? In this episode, I sit down with Dr. V (Vaibhav Agrawal), Founder ODDBIRD VC, is a San Francisco-based venture investor who spent nearly a decade at Lightspeed, to explore why he believes the traditional venture playbook is changing. Sourcing has become a media and distribution business, companies are staying private longer, and investors increasingly need to think proactively about liquidity rather than simply waiting for their winners to go public.

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

• 0:00David Weisburd?

  Dr. V, you spent nearly a decade at Lightspeed before deciding to spin out. And before we started recording, you said that the market right now is undervalued in venture. Why is that?

• 0:10Speaker 01

  This is something I learned from Chris Sheppi, who was one of the founders of Lightspeed. He said, "The market always seems to be overvaluing technology, and 10 years later, you realize it wasn't." I've kind of like learned to tune these things out. But you look at the data, right? I mean, if you look at, let's say, 2000 to 2009, when I was starting my first company, on the aftermath of global financial crisis, the total market cap of private technology companies at that time was maybe close to 50 to 20 billion. And then the largest company was Facebook, 120 billion in market cap. And you fast forward today, we're talking about multi-trillion dollar companies. We're talking about a private market that's in aggregate of about $5 trillion. If somebody had said we would be sitting at a $5 trillion private market cap even three years or four years ago, it might have seemed ludicrous, right?

• 0:55Speaker 01

  And here we are. And mind you, we've only seen AI disrupt coding in the world in a realistic way. Most of the revenue of Anthropic and OpenAI are coming from coding. So whether it's medicine, engineering, physical automation. When I look at the degrees of possibility, it just feels very, very large.

• 1:13David Weisburd?

  And the very rough back of the envelope math on that is market cap of the private companies versus venture capital going after those private companies.

• 1:22Speaker 01

  For perspective, if back in 2008 to 2009, the top funds in Silicon Valley were probably raising like $500 to $200 billion funds. And even that was like, wow, that's crazy. There was no SoftBank, $100 billion Vision Fund, there are no mega hedge funds. And I look at like even just Lightspeed and recent Sequoia, now increasingly interestingly, Benchmark and many others, like you're already in excess of 50 to 70 billion. The markets have completely reset in terms of the capital scale and expected value.

• 1:56David Weisburd?

  And the big unknown is whether AI will actually disrupt labor.

• 2:01Speaker 01

  I don't think it's an unknown, right? If you look at the impact that Cursor and Claw are having on coding, which is inherently engineering labor, from like writing sophisticated code and research level code to implementing basic systems, like systems implementation and stuff, very different level sophistication. You're seeing AI kind of eat into a whole bunch of that. For me, the question is less whether it can disrupt labor. The question is what kinds of labor get disrupted first? My point of view is that categories of labor where there is low cost to going wrong, i.e. there's a little bit of course correct available, you don't require a lot of trust. And then second, ones where there's a deterministic right answer, and you can actually close

• 2:45Speaker 01

  the feedback loop, improve the model on a continual basis, which is why coding is so perfect, right? Because when a code is written, it's expected to perform in a certain way. It either works or it does not. Along those two axes, you're going to see things evolve. And if one end is coding, probably the other extreme end is medicine. Cost of going wrong is very high because of multi-systemic nature of biology. It's like very hard to attribute a response or unintended response of something solely to the algorithm.

• 3:13David Weisburd?

  And you've said that the old venture capital playbook no longer works. Why is that?

• 3:17Speaker 01

  The venture playbook has changed. 10 years ago, venture was not a media business. It was a reputation business where investors could invest it over decades, and they were known for investing in certain companies and therefore became aspirational founders to raise capital from. Fast forward today, right? Sourcing, especially at the early stage, is very much a media business. You've seen the advent of like TBPNs getting acquired, and recent Horowitz talks about the new media.

• 3:44David Weisburd?

  Harry Stubings has deployed over $1 billion reportedly.

• 3:47Speaker 01

  There you go. And so there was kind of like this moment where a lot of podcasters were raising funds to varying degrees of success. It is now widely established that distribution is important for a venture firm to be able to see the best opportunities. And then all the way at the end, when you're exiting, right? 10 years ago, investors were not really thinking about exits that proactively. The conventional assumption was you're going to have 10 investments. One or two of them are going to hit it out of the park. Eight are going to like probably go sideways, which don't need any management. The other one or two that hit it out of the park are probably going to go public. So it was kind of like a low effort, more laid back style of planning exits. Fast forward today, we're in a very difficult public environment. And so as an investor, you have to kind of build this muscle of continuously asking

• 4:32Speaker 01

  yourself whether you should be telling a company, buying more in a company, consequently have an ecosystem of relationships of buyers or sellers that you could trade with. That was not necessary many years ago. Companies are staying private much longer, but the average tenure of an investor is reducing. The average time an investor stays at a big firm is reducing.

• 4:51David Weisburd?

  Why is that?

• 4:53Speaker 01

  I think it's just like maturity of the industry. It's become more competitive, I would say.

• 4:57David Weisburd?

  Are they getting poached from other firms?

• 4:58Speaker 01

  Absolutely, all the time. I used to joke, there are three types of investors, right? There's ones that don't perform. You're going to hopefully find them over time and transition them out. Ones that are high performers, but then you're at the risk of losing because they want to go start their own thing, or somebody poaches them. And then what you're left with is the stable middle, right? And that is the dilemma of a large firm. What's happening more structurally is that several parts of what an investor used to do are getting institutionalized. They no longer sit with the investor. For example, marketing. All of these funds now have big marketing teams and investors are collaborating with them. That was not the case when Bill Gurley was writing his blogs or Fred Wilson started writing his points of view. Think about exits again. Lightspeed built a capital markets team to create that discipline at that scale.

• 5:43Speaker 01

  And so now if an investor needed to come into a Monday meeting and talk about their plans for exiting a position, that conversation is now happening, different set of people on a much more regular cadence.

• 5:53David Weisburd?

  And they started this capital markets team while you were at Lightspeed?

• 5:57Speaker 01

  They were just starting when I was at Lightspeed.

• 6:00David Weisburd?

  What does that capital markets team do exactly?

• 6:02Speaker 01

  Number one, list of companies that a venture fund owns and segment them, discipline into what you want to buy or hold, and then what you want to sell. That itself in a big firm where you have 30, 40, 50 investors. And by the way, you have thousands of companies, even getting to that level of clarity takes a lot of work. The second is developing relationships in the ecosystem that actually allow for these exits to happen. For example, big funds are now using a variety of tools to actually exit companies. They're doing continuation funds, they're doing GP secondaries, LP secondaries, encouraging M&A. Firms like Lightspeed are also doing buyouts now. So they kind of like could be a seller and a buyer, right? Arguably.

• 6:47Speaker 01

  And so that ecosystem, as it continues to develop, requires a continuous relationship building and awareness of how people's strategies are changing.

• 6:57David Weisburd?

  Saying that you want to manage liquidity and you want to provide liquidity to LPs sounds extremely obvious and sounds like everybody should be for that. But the question then becomes, who is buying these assets? Everyone I talk to on the show is chasing the same thing, an edge. And more and more, the edge comes down to your information, not just having it, but being able to trust it when the stakes are highest. AI is doing more of the information gathering for you every day, and most tools are very good at sounding right. The summary reads clean, but can you trace it back to the filing, the transcript, the specific passage that drove the answer? Or are you just trusting the confidence of the output? For investors, that's not a minor concern. A missed filing, a missed weighted source, a context that got lost somewhere in the

• 7:39David Weisburd?

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• 8:23Speaker 01

  What we are seeing now is that the participants in private markets have structurally expanded, right? 10 years ago, the conventional wisdom was M&As are done by like incumbents or big sort of tech companies, public companies, either crossover funds. Or there was some combination of growth capital, very sophisticated institutional capital. What's happening is the following. The biggest structural shift is that there are a lot more participants. In particular, I believe that the family office world is far more switched on to alternative assets. In fact, we invested in a company that's actually rolling up small wealth management

• 9:04Speaker 01

  firms, and one of the offerings is to offer alternative products to the young generation as the wealth gets transferred. So you're seeing more and more of entrepreneurial energy on that side, and they do not hesitate to sort of make direct investments as well, right? The second is sovereign wealth funds. Sovereign wealth funds were not participants in the private markets in a way they are now, even like 10 years ago. The sovereign wealth kind of market at large, it's about $15 trillion of capital, right? By and large, sovereign wealth funds are extremely under-allocated to venture. Nordics, for example, have historically never invested in alternatives.

• 9:45Speaker 01

  Of this 15 trillion, about five, about a third, is getting invested in private markets. Granted, it includes venture buyouts, and about two thirds of that is getting invested in direct investments. So for every dollar that they are investing in private equity fund, multiple of the dollars are getting invested in direct.

• 10:08Speaker 01

  Purchases of stakes in companies. That gives you breadth of and different types and scale of buyers.

• 10:16David Weisburd?

  GIC and Tomasek were early adopters of this. They would put large checks into venture funds like Sequoia and then ask for direct investing and to make introductions to them for those follow on rounds.

• 10:27Speaker 01

  It's one thing to say I want to co-invest and it's another thing to say.

• 10:30David Weisburd?

  Is that because they add the infrastructure to process the deals?

• 10:33Speaker 01

  It's a capability, right? The best companies are always competitive. Their rounds are going to be kind of unplanned, right? How much notice does any shareholder of Anthropic have whether or not they're going to raise another round of capital in the next six months? Very little, I can tell you that, right? Even they are hearing things as the market is hearing things. You have a co-invest opportunity that pops up that needs basically a decision in like less than five days and we are talking meaningful chunks of capital. And most institutional LPs are not set up for that kind of work, right? The LP underwriting world is relatively slower paced. Typically, these guys meet maybe once or twice a month in an investment committee. And so by the time you did, you don't even have enough time to take it to the IC.

• 11:17David Weisburd?

  Very unusual as well. That's very cutting edge. One of the common traits among the very top LPs is their governance. They don't have to wait to their quarterly or biannual meetings, but once or twice a month is very unusual for an investment committee.

• 11:31Speaker 01

  It's hard. LPs are trying to work around it, but by and large, I would say the co-investment motion for GPs has been underwhelming. Even today, like we are a young fund. We are absolutely interested in showing our best companies and positions as they're coming up for follow ons to our LPs.

• 11:53David Weisburd?

  Co-invest is one of those things that 99% of LPs say they want to do and probably 10% do on a regular basis.

• 12:00Speaker 01

  I think 10% is an overstatement. I think it'll be like 2%.

• 12:04David Weisburd?

  I was thinking about this when you mentioned the family offices doing directs. I have a saying that the only thing worse than two and 20, or today, two and a half and 30 is 100 and 0, meaning you don't pay any fees, but your investment goes to zero because you're adversely selected. And outside of very specific niches that family offices dominate in, let's say they had some widget business and now they have a widget deal. Family offices are the most adversely selected party in the market.

• 12:35Speaker 01

  Look, one family office in one, right? Each kind of family has their own dynamic in terms of where are they? Are they in wealth maximization? Where the entrepreneur who made the money is still allocating? Are you the third generation, fourth generation that's wealth manager? Where you're in sort of more wealth preservation mode and dabbling in risk on the side? My personal point of view is that it's really, really hard to deliver returns consistently. Doesn't matter what you're leaning, whether you invest in crypto, you're investing in private markets, you're investing in public markets. So much so that I have made zero investments outside Lightspeed or my new fund in the years that I've been in venture over the last decade. I have purchased zero public stocks. People ask me, hey, why don't you practice? Some doctors practice while they're doing this.

• 13:20Speaker 01

  I just don't know how to be good at that and this at the same time. That's the school of thought that I subscribe to. And so sure, like if you're gonna kind of dabble in things and kind of operate on vibes, chances are you get maybe lucky or unlucky. You could make money, you may not make money, but over a long period of time, it'll be very hard to produce the performance that you want to see.

• 13:44David Weisburd?

  You said something earlier about Lightspeed getting into the buyout business. We see general catalysts growing. I think they're approaching 50 billion in assets. What do you see in terms of the future of these multi-stage firms and their asset management strategy?

• 13:59Speaker 01

  What happened with private equity firms two decades earlier, whether it was the KKR's and the Blackstones and the Blackrocks? They all emerged or broke out with a part of the business. And then over time, other parts of business sort of also took roots and became massive. Blackstone was not a real estate private equity investor in the early days.

• 14:19David Weisburd?

  Now it's their biggest business.

• 14:20Speaker 01

  They are the biggest commercial real estate owner and it's their biggest business. And so I think what's going to happen here is the same. A lot of these firms broke out, came into eminence, became famous for doing great work in venture capital, and they are increasingly prying their hands at new, other adjacent types of asset management. And I do think like the kind of buyout that let's say Lightspeed aspires to is very different from the kind of buyout that let's say Summit or TA is doing, or kinds of risk they will take, the premiums they'll pay for it are very, very different. And so I do think there is room for innovation, there is room for multiple strategies. That's the kind of path I see. Keep adding products, regions, keep adding scale.

• 15:04Speaker 01

  Some firms have decided to invest in public markets alongside privates. People are increasing assets in their management through a variety of different ways. And I would say that, look, my mom always said, she's a CPA, she's like, follow the money. And so if you look at the asset management business, like if I was to step back and say, okay, like what is an asset management business and how does it get valued, right? The value of the business is disproportionately linked to the recurring and less correlated to the performance because it's hard to model for any investor. And so if that is the core variable that drives the value of your business, then seeing

• 15:48Speaker 01

  firms optimized for that makes sense.

• 15:51David Weisburd?

  Something paradoxical and almost people don't want to talk about, but as venture capital firms go from vintage to vintage, as they build out their businesses, their right to win does increase, all things being equal. The problem is that oftentimes their fund size outpaces their right to win because a lot of things do compound, their relationships, their brand, their institutional know-how, the mistakes that venture funds start. In the first vintage, you oftentimes have very hungry GPs, but you also have GPs that are learning. But VCs actually, as they grow, there is some natural growth rate that should be provided given some of the advantages that accrue to a growing franchise.

• 16:31Speaker 01

  Venture is a compounding business. Any success that you have in the first fund, any things, any learning all compounds in the second fund. The reality is that like people who run venture funds are also humans. They have the same ambitions and wishes and worries and insecurities that any one of us has. And so they don't want to get left behind. They want to build the best business out there. And so what ends up happening is that as influencers, a sensitive entrepreneur with all their human tendencies, you tend to get drifted from your originally stated strategy. And so that strategy drift can happen in multiple ways. Size of the fund is one, right? Where you're raising 100, now you raise 300.

• 17:14Speaker 01

  Like that is one way of strategy drift. Another way is like you add new areas of investment. Let's say you were doing only software in the first fund. Now you start doing software and crypto, very different animals. But by and large, I agree with you that if there's consistency of strategy, you get better at the craft and your odds of success increase.

• 17:35David Weisburd?

  You've been venturing out for a decade. What are some other common biases that smart venture capitalists make over and over again?

• 17:45Speaker 01

  I would say that in like venture, historically, investors have relied on their network to yield the best opportunities. If I am an investor in your company and you send another founder you think well off because you went to college with them, chances are they are interesting because A, I know you and I think you're high quality. B, you're only incentivized to show me the good stuff. And so a lot of venture kind of opportunities originated that way. So the positive side of that is if you have the networks, if you win a circle companies, then you're going to get a lot of deal flow around those companies. The shadow side of founders of Airbnb and founders of Stripe and founders, many other founders like that began as total outsiders.

• 18:30Speaker 01

  They did not.

• 18:31David Weisburd?

  It's the Peter Thielism. Silicon Valley is the outsiders becoming the ultimate insiders.

• 18:36Speaker 01

  Correct. It's a bunch of outsiders and they've produced like some of the most iconic companies of the last generation. Bias is a heuristic that helps cut through a lot of noise and focus on a few things that matter. But at the same time, it can also blind you to opportunities that are high quality on their own merit, but are just not getting your attention because of the way you function. I would say that is a big bias. Second thing, an investor's career, whether it's their progression in the firm, whether they're leaving or joining another firm, whatever it is, that's happening much faster than companies exiting. And so in the interim, what's the yardstick to know whether someone's doing well or not? It's markups.

• 19:19Speaker 01

  I let a deal and is that now marked up by some famous person at a healthy price or not? That scoreboard orientation has become much more of a bias in the current. Markups are great. I don't have an issue with them, but I would say that when you start optimizing and the whole system starts aligning around them, right? Forgetting that this is a transient mark, this is not true performance, things start to change. As an example, if you're a young person at a big firm, the only way you progress is if you get deals done and they get marked up, right? So now as a young investor, you have two choices. You can go after something that's hot in the valley and therefore is top of mind for people inside the firm as well. You can find something and bring that and advocate for that in the investment committee.

• 20:04Speaker 01

  Or you can go look under some unturned pebbles and go and find an idea or person that's kind of one standard deviation away, the classic contrarian. But you're not sure whether that deal gets done or where do you spend the time? You obviously spend the time on stuff that's more obviously interesting to the company. If every kind of young ambitious investor is doing this inside every large firm, suddenly something that's hot becomes white hot. Everybody's doing the same thing, then kind of the returns get competed away.

• 20:31David Weisburd?

  Quant traders would call this your momentum factor. So you're overweighted in your momentum factor.

• 20:35Speaker 01

  I tell my wives, venture investors are two types, right? One is, I would say, an investor and the other is a trader, right? An extreme form of that momentum investing is trading. I have a point of view that this stock is going to get marked up or is highly legible to capital and therefore is an interesting, especially in the markets like the one we are in, momentum becomes, that scoreboard takes over.

• 21:01Speaker 01

  More long-term thinking around what creates durable and enduring performance for LPs. And then founders also start copying that. If the capital's chasing the thing that's growing fast or making the most noise, then founders also get distracted from their core value drivers and also then start playing the same game. Now you have people on two sides of the treadmill kind of accelerating each other.

• 21:24David Weisburd?

  It's funny because it's all the way up the capital stack. On the LP side, you have the same issue. The average CIO at a pension fund, 6.1 years, there's a famous study on this. And you have a similar dynamic where the low-performing LPs will struggle or they'll get fired.

• 21:42Speaker 01

  Low-performing GBs.

• 21:45David Weisburd?

  No, LPs.

• 21:46Speaker 01

  Interesting.

• 21:47David Weisburd?

  And the highest performing LPs will actually get hired by larger endowments because the pay could go up three times.

• 21:54Speaker 01

  They have more opportunities.

• 21:54David Weisburd?

  If it's a billion-dollar endowment, they go to $10 billion, $20 billion endowment. Their salary could actually go up three times. So you have the same dynamics where you're also chasing momentum. So there's almost a systemic momentum trade within all the private markets, not just venture capital.

• 22:12Speaker 01

  That's true. This is why early-stage venture requires you to find the patent breakers, find things that are not consensus yet versus later-stage venture, which is kind of like scale and efficiency of capital. And by and large, better discovered things, people and ideas differ in their motion, what they're looking for. And look, the strongest kind of evidence, when I said I'm going to do this, my managing partners wrote the first check, the fund. And so they acknowledge that, look, this is a different end of the market. Now, everybody aspires to do everything, but the reality is that the two businesses are quite different. And as far as I know, like, to the best of my knowledge, we are the only one that's backed by the two managing partners now.

• 22:57David Weisburd?

  Your wife likes to say that you chase chaos. Why?

• 23:00Speaker 01

  My wife has known me for a very long time. We met when we were 17 and 18 as medical students in India. I trained in medicine, my wife trained in dentistry, and we met in the same dissection halls, peering over. Morbid bodies, how long she's known me. And in the world of medicine, right, the ER is probably among the most chaotic, the most kind of action-packed places. That's where I ended up in medicine. And fast forward today, I am in venture. If you look at the world of finance, venture is probably at the more chaotic end. When I had sort of now established myself at a big fund, now I want to do something else. So I think there is some truth to what she says is looking for chaos.

• 23:41David Weisburd?

  And how does that make you a better venture investor?

• 23:43Speaker 01

  Chaos to me means change. A lot of frenetic change where there's a lot of noise, a lot of stuff happening. And from a distance, kind of disorienting to determine really happening, right? And so I think there is an intellectual intrigue in unpacking the chaos. It's very hard to fit chaos in a pattern. Pattern matching produces returns, but pattern breaking produces legendary returns. The best investment I made at Lightspeed was a B2B company that leveraged software, financial services, and discovery to create a supply chain for custom manufacturing. Looked like a commerce company, a marketplace in the early days. It did not fit the pattern. When we bagged it in 2018, one, commerce was B2C.

• 24:28Speaker 01

  Two, it was moving branded or finished goods from one place to the other, right? I need a phone, buy it on Amazon. If you look at this company's, it was B2B. We didn't, B2B marketplaces, is that a thing? Are those going to get richly valued in public markets? We don't know. Second, this is custom manufacturing. It's almost like a service, right? How does that impact scale and the volume of the business? There were a lot of things that did not make sense. There was no conversation around supply chain or manufacturing. We did not have a thesis, right? But then when you kind of like see something that's too hard to ignore, which is the quality of the founders at that time, going after what seemed like a large market with a very

• 25:11Speaker 01

  agile business model. And that gave us a conviction that this was a bet worth taking. Eight years forward, everybody's talking about supply chains, everybody's talking about B2B. That company has now become a model for many contemporaries using similar primitives for other categories across Europe at that time and in the US. So I think comfort with chaos and being able to isolate the signal from noise is what translates into venture from the ER.

• 25:39David Weisburd?

  I love that great returns come from pattern matching. Legendary returns come from pattern breaking. When I think about some of the best returning investments in the last generation, like Airbnb, Dropbox, Stripe, Coinbase, they were not only great exits, they were also great entry points. And if you're just following trends, then you're going to be already in a market when it's overheated. And yes, you might still hit that momentum trade, but you may enter at a price that sometimes 10, 20, 30x higher than the equivalent of a company that's not in both.

• 26:15Speaker 01

  Absolutely. And crypto is a great example, right? It started off as a kind of weird thing around 2009, 2010. I remember hearing a little bit in the valley, I'm like, what are these people smoking? And then I'll go come back and build my clinic business, which was the first business I was building. But it kind of kept growing, it kept rumbling. A lot of engineers were enthusiastic about it. In hindsight, Union Square Ventures kind of looked into it. Again, it was chaotic, right? Yet they peeled the layers back, looked at it. They formed a point of view wrong. Look, having a point of view deserves full marks, right? Because you've applied yourself honestly to the pursuit of an answer. They spoke about why they are investing in crypto.

• 26:59Speaker 01

  And they produced the most legendary investment of the time. Whereas at that time, if you look at the Silicon Valley, it was largely asleep crypto. And I would say it's only in the 2019 to 2022 timeframe when crypto was really rallying. All of them started dabbling in crypto. I would argue that many of them also deployed far more capital in hindsight than what seems rational. So that's catching on to a trend in a momentum trade. You better be darn sure that this is a large opportunity. You're likely like making these decisions quickly. You're likely paying momentum multiples and momentum prices for these deals. These companies are probably high burn because they're all competing each other.

• 27:43Speaker 01

  And these companies are going to raise capital, so you're going to overfit at the time of exit. You put all of that together, if the market doesn't come through, you are sitting without a floor under your feet.

• 27:54David Weisburd?

  Stanley Drunken Miller says that nothing looks as cheap after it's gone up 40%. When something goes up, it gives investors this feeling that it's actually safe to invest. It's this counterintuitive thing. You mentioned this whole concept of investing in chaos. Oftentimes, chaos comes with a market drawdown. Over your nearly decade at Lightspeed, did you see Lightspeed execute on these opportunities where, for lack of a better word, the baby went out with the bathwater? In other words, certain sectors were oversold?

• 28:32Speaker 01

  I would look at consumer right now in the valley. I would argue that 10 years ago, when I joined venture, take a pick of venture firm on Sandal Road, they all had a known partner, maybe more than one, right? That were focused on finding the next Facebook or Snapchat or whatever. In fact, Lightspeed grew up as an enterprise and for firm and then made some iconic investments like Snap and Affirm. Fast forward today, I would say across the valley, I do think consumer is oversold. Again, I go back to the basics. It's kind of hard for me to imagine that, given the amount of change in our culture, the amount of drift in our society, different preferences, our new ways of working, it's

• 29:13Speaker 01

  impossible that we don't see new paradigms of consumer emerge. And when it does, it's going to surprise us. And so firms that are earlier stage, that are willing to look for the chaos and find some sense in it, take the risk, will get paid for finding the next Snapchat or Instagram. Bigger firms are going to follow because they aren't looking for them as actively.

• 29:38David Weisburd?

  I had this very conversation with Niko Benatsis, who was at General Calis for 15 years, made a couple of really good points. One is that consumer is just a segment of the market and it's more than enterprise. So from a first principles basis, there should be roughly 60% or so going into consumer as enterprise. The other point that he made, it's very obvious in retrospect, is chat GPT as a consumer company, valuable companies right now in the private market are actually consumer companies. And the other point that he made was that 50% of all of the market cap in an industry is made before it's actually named. So in defense, Anduril and SpaceX.

• 30:20David Weisburd?

  So if you're just following trends, if you're just trying to raise a fund once a sector reveals itself or is even named, you've already lost 50% of your returns. And what's bad about that is not only have you lost 50% of returns, but usually the next 50% take another 20 years or so. Those first two years are so critical in order to generate alpha at the early stage.

• 30:41Speaker 01

  I would agree with that in spirit, but I don't think that's true for all categories. Like, for example, like look at fintech, right? Ribbit was the poster child of that. I think it is a little oversold today and has a very strong opportunity going forward. Back to the hype cycle, some opportunities announce themselves, capture the sort of imagination of investors, get overbought, then they get oversold, but the underlying opportunity still remains. And that's where money gets made. An investor feel there's a longer-term opportunity that the market is mispricing, right? I do think consumer is like that. I do think fintech is like that. Those are some categories that are oversold. We haven't talked about geography. I also think there will be emergence of technology hubs in a way that hasn't happened

• 31:23Speaker 01

  in the last many years in places like Germany, Bangalore and others, and even Riyadh, I would say the Middle East for that matter, because of the kind of impetus in these economies to diversify trading relationships. Germany has a really robust historical industrial complex and they're quality engineers.

• 31:43David Weisburd?

  Speaking of different geographies, you like fresh off the boat founders. Tell me about this thesis.

• 31:50Speaker 01

  I often think strategy in venture is emergent. It's built in the field, right? Funds investing on AI were not raised for AI.

• 31:59David Weisburd?

  Have been some of the best performing funds.

• 32:01Speaker 01

  The market opportunity doesn't care about what your fundex is, right? And so if another Sam Altman right now is like thinking about building the next big real estate company, chances are like that's going to be a good company. Let's go try and be in business with them, even if real estate is not on your deck. Of the 17 investments we've made, 15 repeat founders, i.e. they've started something before, but they're not fully fulfilled yet. They're looking for their big career win and they're restarting.

• 32:32Speaker 01

  Many of them were born internationally and are just setting up shop in the US to build their current business.

• 32:41David Weisburd?

  That's the fresh off the boat.

• 32:42Speaker 01

  That's probably like fresh off one boat trip. I think there is this emergence of the global founder that is the valley every summer or every other summer. I've been coming to the valley since 2005. I was a medical student, right? And I used to come here to shadow a cardiovascular surgeon in East Bay. I did not even know about Sandal Road, but I just kept coming because there's something exciting about learning, there's some growth from that experience. And I see that a lot in founders. You'll find founders visiting all the time, looking for opportunities. And we just started spending time with those and realized these are pretty sophisticated founders and they're actually systematically mispriced because they're not in the natural local network of an investor.

• 33:28Speaker 01

  Nobody's looking for them. They might have been invested in by the top firm in a different market. When they come here, they start off as outsiders.

• 33:36David Weisburd?

  Dr. Vedas, been absolute masterclass. Thanks so much for jumping on.

• 33:39Speaker 01

  Thank you. Thanks for having me.