Inside Thrive Capital: Investing in OpenAI, Wiz, Cursor, Nudge, Physical Intelligence

Thrive Capital Partner Philip Clark https://www.linkedin.com/in/philip-clark-883a41126/ joins Sourcery to break down how one of the most concentrated and influential firms in tech evaluates founders, builds conviction, and partners with companies that reshape the world. “Josh always had a line to me when I joined Thrive, which is that the people who win deals are the ones who want to win them most.” In this episode, we go deep on Thrive’s investments in OpenAI, Cursor, Wiz, Nudge, Physical Intelligence, and why Philip believes we’re entering a golden era for hardware — powered by cheaper sensors, software intelligence, and a new generation of engineers trained at SpaceX, Anduril, and Neuralink. Philip tells the inside story of: Seeing an early demo of OpenAI’s GPT-4 before launch Why Thrive flew into an active war zone to close the Wiz deal Cursor’s explosive growth from a small pivot to a multi-hundred-million ARR product How Nudge is engineering the human brain using ultrasound Why hardware’s barriers are falling and why the biggest companies of the next decade may be physical If you want to understand the future of AI, hardware, and the next generation of “counterfactual companies,” this is the episode. Philip Clark: https://www.linkedin.com/in/philip-clark-883a41126/ Molly O’Shea: ⁠https://x.com/MollySOShea⁠ Sourcery: ⁠https://x.com/sourceryvc 𝐄𝐏𝐈𝐒𝐎𝐃𝐄 𝐋𝐈𝐍𝐊 YouTube: https://youtu.be/niosgDC-QHU 𝐒𝐏𝐎𝐍𝐒𝐎𝐑𝐒 • Brex—The modern finance platform, combining the world’s smartest corporate card with integrated expense management, banking, bill pay, & travel. https://brex.com/sourcery • Turing—Turing delivers top-tier talent, data, and tools to help AI labs improve model performance—and enables enterprises to turn those models into powerful, production-ready systems. https://turing.com/sourcery • Carta—Carta connects founders, investors, and limited partners through software purpose-built for private capital. Trusted by 65,000+ companies in 160+ countries, Carta’s platform of software & services lays the groundwork so you can build, invest, and scale with confidence. https://carta.com/sourcery/?utm_medium=newsletter&utm_source=sourcery&utm_campaign=20250923-amer-carta_sourcery_data_insights Follow Sourcery for the latest updates! https://www.sourcery.vc/ 𝐓𝐈𝐌𝐄𝐒𝐓𝐀𝐌𝐏𝐒 (00:00) Who is Philip Clark? How he joined Thrive Capital (02:45) From physics to investing: becoming a technologist–optimist (04:00) How semiconductors led him to Thrive (06:00) Deep dive: Mesh Optical & the data center interconnect opportunity (07:45) Inside Cursor’s explosive growth and why AI is “speed chess” (09:15) How Philip first met Cursor’s founders during a pivot (11:30) Path to partner & Thrive’s “full-stack investor” model (13:45) The Wiz story: flying into an active war zone (17:15) Why Wiz closed six-figure deals in weeks — the rare “fast + big” enterprise combo (19:30) Why hardware is back: sensors, software, and SpaceX-trained talent (21:45) The rise of Nudge and engineering the human brain (26:30) Neuralink & Nudge: read to stimulate (31:15) Why Thrive concentrates instead of “spray and pray” (36:00) Inside OpenAI: seeing GPT-4 before launch (40:45) What comes after SaaS — and the companies unlocked by AI

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

• 0:00Speaker 00

  Our philosophy at Thrive that Josh taught me is that the people who win deals are the people who want to win deals the most.

• 0:16Molly O'Shea?

  Philip, welcome to Sorcery.

• 0:17Speaker 00

  Thanks for having me.

• 0:18Molly O'Shea?

  This is a very big day. We have a very stealth, private fund here. Okay, so you've been at Thrive for the past three years. You joined there in 2022.

• 0:28Speaker 00

  Yeah.

• 0:28Molly O'Shea?

  And since then, you've been involved in some of pretty incredible, some pretty incredible investments, like OpenAI, Cursor, Wiz, Nudge, and Physical Intelligence. How did you get to Thrive?

• 0:40Speaker 00

  Yeah. I think at the end of the day, I'm just a technologist and optimist. I have always really wanted to study and be like the people who worked on really big technology products and projects that bent history in the right direction. As a kid, my heroes were Oppenheimer working on the Manhattan Project, or Claude Shannon working at Bell Labs, or Elon Musk, you know, starting SpaceX when I was four or five years old. And I actually went to school originally to study physics. I really thought that was the right way, sort of in the mold of some of those earlier figures, of thinking about the hardest problems in technology. Now, truth is, I was pretty good at physics. I probably wasn't quite good enough. And the road to making an impact on physics problems that

• 1:24Speaker 00

  are open in the field, very, very long, ended up switching to a more pragmatic route, which was studying computer science. But even so, really always inspired by this idea of technology being the right engine of history. And I think after spending a lot of time thinking about having an impact there, there are kind of two big options today, if you want to actually be part of that technological engine. One is you can go start a generational technology company. To be perfectly honest, I didn't have any really great ideas of how to do that coming out of school. Or the second is you can be a partner to these sorts of companies and help them make the really important decisions. And so, over time, it became pretty clear that the second was the path that I wanted to take, and Thrive seemed

• 2:08Speaker 00

  like a really exciting place to do it.

• 2:10Molly O'Shea?

  I think Jeff Bezos had the same problem. He wasn't that good at physics.

• 2:14Speaker 00

  He actually tried to do math and then physics and then he did quant trading.

• 2:18Molly O'Shea?

  So how did you meet Thrive?

• 2:20Speaker 00

  Yes, a little bit of a funny story here. So to the point of being an amateur physicist at one point, I was really into semiconductors. I think they're one of the great examples of applied physics in the world. And we literally have machines that zapped plasma with lasers twice in order to imprint patterns on semiconductor die. And so I used to maintain a little sub stack about semiconductors. And my now partner Josh, who started Thrive back in the 2010s, was really interested in 2021, 2022 about the idea of reshoring semiconductor manufacturing to America. And these days, I think almost all of advanced semiconductor manufacturing happens in Korea and Taiwan.

• 3:04Speaker 00

  This actually is a big change from history. Back in the 1990s, about 40% of semiconductor manufacturing happened in the US. Today, it's something like 10%, so drastic decrease. And as you know, and I'm sure as all your viewers know, these are probably the single most important inputs to all information technology, whether they be computers or artificial intelligence or what have you. So big question of is there a way to get America to be a major producer of these things again? Josh was exploring this and came across my sub stack because a former colleague at Bridgewater, where I worked before ABC, was at Thrive at the time. And he got in touch and we started talking about semiconductors. And I'll spare you all the gory details, but it turns out it's very difficult to reshore semiconductor manufacturing,

• 3:49Speaker 00

  or at least would require a little bit more money than Thrive had available at the time. But this was something where I had the reaction of someone who had the boldness and ambition to think about an idea as important as that. Well, if you go back to great technologists working on great technology projects, that felt really unique and distinct. And so as it became clear that I wanted to move from being in sort of quantitative trading hedge fund world to actually investing in early stage and fast growing technology companies, I went to Josh for advice and knew what they say, ask for advice, get a job. And now I'm at Thrive.

• 4:25Molly O'Shea?

  Simple as that. Make a Substack.

• 4:28Speaker 00

  Make a Substack.

• 4:29Molly O'Shea?

  So no investments in semis?

• 4:33Speaker 00

  Not yet. We are investors in a company called Mesh Optical, which is in a data center. So if you think about the great AI CapEx build out happening right now, hundreds of billions of dollars being spent each year on building out new data center capacity to train the latest generation of AI models. Within a data center, there are a few important components. There is the semiconductors themselves. Nvidia is a four and a half trillion dollar company. It's a result of being the greatest semiconductor designer in the world. There are also a lot of other technological components. One of these is called the interconnect, which is what moves data from one point in a data center to another. Mesh is a pair of founders from SpaceX named Travis and Cameron,

• 5:16Speaker 00

  who I actually knew back from college and then went to work on the Starlink Photonics team. So the team that uses lasers in space to pass data from one satellite to another to give us internet. And they are bringing that innovation to the interconnect space in data centers. And so we led the seed for that company at the beginning of this year. So that's where we've invested in data centers thus far. No chip companies thus far.

• 5:41Molly O'Shea?

  Okay, all right. Well, we'll cover the whole stack because I definitely want to get your take on where the value accrues in AI. But before we get there, let's talk about your portfolio and your thesis around that. So what companies are in your portfolio and what board positions you have?

• 5:57Speaker 00

  Totally. I'm pretty lucky to work with a few really, really exciting companies. I think one of the great privileges of this job is that you don't just get to work on one really exciting problem. You get to work on a few with several founders of the potential or R generational. A few companies that I work very closely with, Cursor, automating a lot of the drudgery associated with coding and being the ultimate AI pair programmer for a lot of developers. I think when we invested, there were a couple tens of thousands of users and low, single digits million ARR. Fast forward to today, I don't think the company publicly publishes revenue. But called in the many, many hundreds of millions of run rate revenue and many millions

• 6:39Speaker 00

  developers using the product. And that has just been incredible growth story in a span of just 18 months. I think one of the really wild and exciting things about the AI era is that the timelines are getting compressed in a really radical way. I had the privilege of speaking to Michael Dell, actually, a few weeks ago. And that's one of the great CEOs out there who has lived through both the internet era and the AI era and played a big role in each. I asked him how he thought about the difference between these two. And his line to me was, in some ways, feel very similar in magnitude of impact. But whereas the internet era was like playing chess, the AI era is like playing speed chess. And I think that's what we're starting to see with those companies and cursor, founders there, some of the greatest technologists I've ever worked

• 7:20Speaker 00

  with. And really exciting to see them change how an entire discipline and way of work is done in a small, small window of time. Worked very closely with a company called Wiz, which does cloud security. If you think about the internet created the first vulnerabilities of web technology, you could actually access documents and files and servers through the open internet. So we got firewalls. And the next wave of information technology was the cloud. So we moved all of our software workloads to the likes of AWS and GCP and Azure. But in doing so, we create a lot of net new ways in which software could be accessed and be made vulnerable. Wiz

• 8:00Speaker 00

  was started in 2020 with the goal of securing cloud software for the world, started by a really incredible team of Israeli entrepreneurs, Asaf, Roy, Yonon, Ami, all who had actually worked on this problem for a little while earlier, but acquired by Microsoft, built out the cloud security business at Microsoft, and then built Wiz, another sort of amazing success story in a very short amount of time. And Google announced the acquisition of that company back early this year for, I think it was the largest sum a startup has ever been acquired for. So another really exciting one. We talk about OpenAI or physical intelligence or none or others as well. But those are a few that I've had the privilege of being close partners to founders for.

• 8:46Molly O'Shea?

  So Cursor is super hot right now, if you didn't know that.

• 8:49Speaker 00

  Yeah, it's news to me.

• 8:51Molly O'Shea?

  I'd love to know, how did you meet Michael and their team?

• 8:54Speaker 00

  Yeah, so Michael I actually met when he was working on a different idea. This is, I think, one of the great lessons of early-stage investing is ideas change a lot. People are really a constant that you want to be focused on. So I met Michael back in late 2022. He was actually working on a tool for mechanical engineers at the time, trying to bring AI to what's called CAD or computer-aided design. Actually, the day I met him was the day he decided to pivot away from that idea. And so most of our conversation was not about any particular company, but about the list of possible pivots. I think my one helpful recommendation at the time was he was thinking about customer support,

• 9:36Speaker 00

  and I recommended that he might find something related to software more enjoyable. My guess is I didn't actually have that much of an impact, but I'd like to think maybe a little bit of a nudge in the right direction. But even in that moment, I think with great founders, there's this almost electric energy you can sense in the first meeting. And shortly afterwards, Michael and Aman moved to San Francisco. They actually merged with another company where they got their other two co-founders, Swale and Arvid, and they started working on the first AI IDE, Integrated Developer Environment, which is sort of the text editor where coding happens. And when they put that out, I tried it and was an early user of the product. And it was definitely one of those magical one-way-door moments.

• 10:19Speaker 00

  Like, once you walk through a door like that, you can't knock through a door like that. And so myself and my partner Miles spent the next year trying to see how we could ultimately partner with them. And fast forward to May of 2024, we finally convinced them that we were the right sorts of people to bring on to the cap table.

• 10:37Molly O'Shea?

  That's wild. And to the point of just, I think, like, going hard at it, you were cited in the Colossus profile of flying into a war zone. And this goes after, you know, the second company that you mentioned, Wiz. So what was that like? And tell us everything.

• 10:57Speaker 00

  Yes, it was, it's definitely one of the more memorable moments of my career. I think it comes down to we are willing to do anything for our companies. And we want to show our companies that if we're going to be the right partner, they should know that we're willing to do anything. And so, story with Wiz is, I actually met them shortly after I joined Thrive for the first time. Actually, if you want a fun story, joined Thrive, Josh had this really great idea of everyone at Thrive should go to a city outside of the core event, so not New York, not San Francisco, and explore it for a couple of weeks. So I went to Tel Aviv, had never been there in my life. And if you're in Tel Aviv in 2022, the talk of the town is this really buzzy, exciting new cybersecurity company, Wiz. And so, I just spent two weeks trying to figure out what was the right way

• 11:42Speaker 00

  to meet this really cool company. Eventually, got a meeting with Asaf, and Josh and I remember did this three-way Zoom where I was actually back in New York at the time, Asaf was in Tel Aviv, Josh was in Tokyo at the time. So you were really spanning time zones. And to the point of Electric founders, like I mentioned with Michael, it was immediately clear this was not your mom's security company. Very, very different. I think many great security companies in the world, they're often a little bit more sort of risk mitigating, you know, like say, cover your butt if you want to be a little bit risque about it. Wiz is not like that. It is a software infrastructure developer platform. I think one of the most shocking things I learned on that first call was that 50% of Wiz's users at the time were software developers, not security people.

• 12:27Speaker 00

  Very different than how security is traditionally done. And so, I think we were pretty quickly sure of the fact that Asaf was this wildly humble but charismatic and brilliant founder. He was working with three other co-founders who complemented him in incredible ways across product and technology and marketing. And this was among the most unique security products we had ever seen. So, similar to Cursor, it wasn't like we wrote a check that day, actually spent a year or so building a relationship with the company, trying to simulate acting like partners well ahead of actually being partners. So that's just sort of how we operate.

• 13:06Speaker 00

  And then we get to December of 2023, early January of 2024. Asaf gives us a call and walks us through the latest numbers. And Josh and I look at each other and we realize we absolutely have to invest in the company. It's one of the most beautiful software businesses we've ever seen. Now, the problem is the Israeli Gaza war is going on at the time. And it's not super easy to get into the country. And so by hook or by crook, we make our way to Tel Aviv in 12, 24 hours. We land, Asaf and you know, generous enough to get dinner with us for four hours. And we talk about the future of the company and their ambitions. And again, immediately clear they're thinking about Wiz on a different level than trying to just build a tool. Really a different way to sort of build cloud software.

• 13:51Speaker 00

  And by the end of the dinner, we definitely want to invest. So handshake on a deal and we're lucky to be investors in the company.

• 13:58Molly O'Shea?

  I definitely have a bunch of questions off of this, but what was mentioned in the Colossus piece was that no other investor would fly there at the time. So was this a highly competitive round and you felt you needed to go there to close the deal?

• 14:14Speaker 00

  Yeah, I think it's a great question and I would frame it a little bit differently, which is certainly, I think our philosophy at Thrive that Josh taught me is that the people who win deals are the people who want to win deals the most. And so we always have a leave it all on the field mentality. At the same time, when we're partnering with companies or we're discussing with companies whether we're the right partner, we don't really do it thinking about other players on the field. You know, you play against yourself, you don't play against others. If our founders were going to be in Israel during what was a trying time, we wanted to be in Israel and show them that that mattered to us too. And so I think it was much more a statement around the types of partner we wanted to be to the Wiz team versus the competitiveness of the deal.

• 14:55Molly O'Shea?

  And then walk me through diligence. So you said that it had amazing numbers, but like, what does that mean?

• 15:01Speaker 00

  Yeah, so Wiz, I think exemplifies like one of the key things in enterprise software that I'm surprised not more people talk about, but oftentimes enterprise software, they're all the classic things you might care about, margins, retention, etc. Wiz looked 11 out of 10 across all these. I think they'd almost never turned, they turned one customer in the course of all the time between when they started the company and when we were looking at this round. But a really special aspect of the business is often what is the size of the deals you can sell versus the speed at which you can sell deals. I actually think often looking at this ratio is a really, really powerful metric of basically how many dollars can you turn as a company and how quickly can you change a market. Wiz had, I think,

• 15:44Speaker 00

  the very best ratio of deal size to speed to implementation of almost any company had ever seen, and it makes total sense. If you're a sales rep at Wiz, you can get on a call with a customer, you can ask them for their cloud API keys, you can pull it into their side-scanning product, they will scan your environment, they will give you a list within a few minutes of all the vulnerabilities you didn't know you had. And what customer is not going to look at those and say, "Oh, my God, I have a bunch of vulnerabilities, but I'm not going to buy the product that showed me the fact that I was super exposed." And so Wiz was closing on these like very healthy six-figure deals in a matter of weeks or months, which was just unprecedented. Normally, you have

• 16:27Speaker 00

  small deals and fast cycles, you have big deals and slow cycles. Wiz had more or less figured out how to actually cut the Gordian knot and get both. So that felt really special. I think the second was, I mentioned this developer population on the platform. It actually felt more like a software infrastructure tool, like a Datadog or a CloudFlare or the like than a traditional security tool. It wasn't a check-the-box compliance workflow, it was actually how do you surface issues to engineering teams, provide them with the context to fix those issues, and then remediate them. And that felt very unique and special, too. And I think finally, most products like to say they're platforms. Very few products are actually platforms. Wiz was actually a platform. If you looked at the number-

• 17:11Speaker 00

  Number of products that were being adopted across different areas of the stack. They had code security on the left-hand side of the stack. They had cloud infrastructure security in the middle of the stack. They had runtime security. So actually looking at the live software workloads running on the platform and seeing all three of those getting really healthy adoption rates in an end-to-end way for a company that was barely four years old at the time. That was really, really unique to you and gave us a lot of confidence that the company is going to have not just an act two, but probably an act three and four as well. And I think the mark of a lot of great companies is that their first product gives you the right to go do and build some really exciting second and third products.

• 17:51Molly O'Shea?

  So these are both software companies, but I've heard you might be the hardware guy on the team.

• 17:56Speaker 00

  I do have that reputation a little bit.

• 17:58Molly O'Shea?

  Why? Physicist?

• 18:00Speaker 00

  Yeah, when you're growing up as a physicist, like you really come to appreciate hardware and like tinker around with it. I also think if you're a technologist and an optimist in this moment, the barriers to entry to hardware are coming down a lot.

• 18:14Molly O'Shea?

  Okay.

• 18:16Speaker 00

  Input costs are getting a lot cheaper. And these days lighter costs are a couple hundred dollars a sensor. Back in 2014, so barely 10 years ago, there was something like $75,000, $80,000 a sensor. So wild decrease. Software is making it a lot easier to build hardware tool. I mean, you live in San Francisco. We have self-driving cars that I think increasingly outnumber the number of human-driving cars in the streets. So we can just build a lot more interesting things with the software intelligence layer than we used to be able to do. And then in addition, there is a generation of founders that have been trained at the first wave of really great technology companies. You know, if you were Elon starting SpaceX in the early 2000s

• 18:55Speaker 00

  or Palmer and Brian and Trey and Matt starting Andro in the late 2010s, there wasn't actually a huge population of pre-existing startup hardware-trained talent to go draw on. So they did amazing works of heroism and built really important businesses. The nice thing today is that those companies have now trained a lot of really amazing engineers that know what it means To build software and hardware technology that can be scaled to very, very high volumes. And those founders can now look at these host of new problems that are available to them because of the changes that have happened in technology and go chase them. And so I think as an investor and someone who's really excited about companies that

• 19:40Speaker 00

  can counterfactually impact the world, that can make the world look physically different in some meaningful way. The number of opportunities now in hardware are far greater than they've been any time in the last 20 years.

• 19:51Molly O'Shea?

  I think you were cited, and we talked about this before, but you were cited that you wanted to become the CEO of Lockheed Martin.

• 20:00Speaker 00

  When I was a kid, this was a, this was a childhood dream. Now, not still a childhood dream, I think, too. I was born in the very late 1990s. And then there was no SpaceX, there was no Anduril, there was no Tesla. So where I'm born today, I'd like to believe I'd like to be CEO of one of those companies. But at the time, if you're a hardware nerd and you're a physics nerd, what are the companies you're really excited about? It's the companies that take on really big technology projects and, you know, say what you will about Lockheed Martin. I think they did take on some of the most ambitious technology projects of 20th century, the SR71 Blackbird, large amounts of the stealth fighter program, large amounts of the missile program. And so I think really incredible technological accomplishments.

• 20:44Speaker 00

  And so probably what I really meant, you know, when I was early teens, young kid thinking about that stuff is I just want to be in a place where I can push the envelope on how really great technology gets built.

• 20:56Molly O'Shea?

  Who knows, maybe you'll take over Lockheed Martin and, I don't know, become CEO.

• 21:00Speaker 00

  One day. It's never too late.

• 21:02Molly O'Shea?

  It's never too late. Sorcery is brought to you by Brex, the financial stack trusted by more than 30,000 companies, including one in three venture-backed startups in the US. Nearly 40% of startups fail because they run out of cash. Brex is literally built to help founders avoid that. Unlike traditional banks that let your money sit idle, chipping away at it with fees, Brex's design to help you spend smarter and move faster. Their all-in-one solution combines checking, treasury, and FDIC protection into one powerful account. You can send and receive money globally at lightning speeds. Get 20 times the standard FDIC coverage through their partner banks and even high yield from day one.

• 21:44Molly O'Shea?

  With same day and even same hour liquidity, access your funds anytime. Companies like Scale AI, DoorDash, Service Titan, Hims, Anthropic, Flexport, Robinhood and Plaid. Trust and use Brex. Start today at brex.com/sorcery. That's B R E X dot com slash sorcery. In today's high-speed business world, staying ahead means using the smartest tools possible, including the powerful capabilities of artificial intelligence. Meet Turing Intelligence. Turing builds customizable AI systems designed to solve your mission-critical challenges, no matter your industry. From expert guidance to tailored projects, Turing helps top companies realize AI that's more capable, more adaptable and more effective.

• 22:28Molly O'Shea?

  With Turing, discover how AI can accelerate your business growth. To learn more, visit turing.com/sorcery, spelt S O U R C E R Y. That's turing.com/sorcery. Sorcery is proudly sponsored by Carta. Carta is transforming the private marketplace, connecting founders, investors and limited partners through software purpose-built for private capital. Trusted by more than 65,000 companies in over 160 countries. Carta's platform of software and services lays the groundwork so you can build, invest and scale with confidence. Carta's fund administration platform supports over 9,000 funds and SPVs,

• 23:09Molly O'Shea?

  representing nearly $185 billion in assets under management, with tools designed to enhance the strategic impact of fund CFOs. For more information, visit carta.com/sorcery. That's C A R T A dot com slash S O U R C E R Y. So it's interesting because you do both software, you do hardware. I want to talk about the revenue between the two, the different types, and then also the business model. So how, how come you mentioned a little bit now, like now the window for hardware investing is a little bit more attractive, but on the business model side, can you break that down? Like how, like it's never been an attractive VC investment. So why is it attractive now?

• 23:49Speaker 00

  Yeah, all those people invest in the early stages of SpaceX and Andro, really regretting it, right?

• 23:53Molly O'Shea?

  They did a horrible job.

• 23:54Speaker 00

  Horrible job. I think you're pointing towards something which is genuinely true, which is that hardware is definitely harder than software. It is harder because you actually have to build more product. It is harder because that product is more expensive to build. You know, it's not like writing bits which are more or less free. It is atoms, which you know, costs money to put together. It is harder because there is often an operational aspect to hardware investing where I don't just have to build a product and press a ship the binary button on a computer. I actually have to have a manufacturing line and a deployment line that gets us out into the real world. That said, I think hardware businesses can be enormously durable and attractive.

• 24:36Speaker 00

  Once you actually get them off the ground, you know, it's really hard to imagine who is possibly going to disrupt SpaceX at this point, knock on wood. Or, you know, what is going to be someone who could really go out and disrupt Andro? And that's because I think when you get over the hump of these really, really hard industries and problems, you're actually have built something at scale that is very hard to quickly replicate. Whereas in software, not true for all businesses, but the barriers to building software are probably lower than ever before, too.

• 25:09Speaker 00

  And so I think there is a dynamic here of, yes, there are bigger fixed costs to getting hardware off the ground, but these businesses can be really unique and powerful once they do. And they often actually have a very geometric growth rate to them. I was looking at the revenue curves actually of Andro and SpaceX and Tesla the other day, and they are some of the only companies that actually accelerated growth at scale, which is to say they are growing at a faster rate at multi-billion dollar scale than They were, they were small. Normally, in a technology company, you have a deterioration of growth every time. I think the difference is hardware is actually the bigger you get, the bigger markets you can access, and the more people trust you to take on big problems. Like take Androl, for instance.

• 25:51Speaker 00

  When they were in a real estate company, you know, they were really great about getting on the field. They, I think, won a program of record, which are the very big budget line item contracts in the National Defense Authorization Act within two years. Fastest timeline since the Korean War. But those deals were good, and they were on the order of, you know, tens or hundreds of millions of dollars. Now Androl is being tapped for many of the great technology programs that the US military is thinking about across all domains, from air to space to Navy, et cetera, which means that the number of contracts they're eligible for and the number, the amount of revenue they can go after is quite a bit larger. And so, again, I think actually expanding the aperture of what they could do.

• 26:33Speaker 00

  Or think SpaceX, you know, for the first 15 years of the business, SpaceX was a launch business. Great business, lots of free cash flow, only provider in the US, maybe the world, that can bring mass into orbit at a competitive price point. I don't know if you know this, but actually before SpaceX, we had to rely on the Russians to bring people to the International Space Station. So good we can have an American company doing it now. But it created the opportunity for them to build Starlink, which is now one of the most powerful internet constellations in the world, and is actually driving a very, very large majority of overall free cash flow and revenue for the business. And so, again, I think these later age, second stage acts of hardware companies

• 27:16Speaker 00

  can end up looking a lot bigger than the early stages, which is a very distinct characteristic. That said, great businesses are great businesses, and you do need to make sure that these things are still high margin, great products, great founders, et cetera.

• 27:29Molly O'Shea?

  There certainly has been a surge of funding that's gone in this direction.

• 27:33Speaker 00

  Yeah.

• 27:33Molly O'Shea?

  And there's also bottlenecks that come with it, whether it's policy, government, et cetera, and different kinds of regulations. So how do you see this current stage of hardware in a cycle? Do you think that we were in a bubble? Are we in a bubble? Like, what's the, like, I guess, temperature on the ground?

• 27:53Speaker 00

  Yeah, I think the temperature on the ground is the returns always accrue to a small number of companies. Venture is the actual asset class with the worst beta and the best alpha of any financial asset class, which is to say, you know, the best companies are going to give you the best possible return of any possible equity instrument you could invest in. And the index is probably going to give you pretty mediocre returns. I think hardware is going to look no different than that, which is to say, I am fairly confident that we are going to produce some of the world's most valuable companies in hardware over the next decade. Even right now, five of the 10 most valuable companies in the world are hardware companies: Apple, Nvidia, Broadcom, Tesla, TSMC. At the same time, these businesses are hard.

• 28:34Speaker 00

  There aren't that many people who are really great at being combined hardware-software thinkers. And so there's probably going to be a lot of companies that don't work. That's just the nature of company building. But I think the really exciting thing, the types of companies we invest in are N of One founders, like the Camerons or the Travis's or the Palmers, or also investors in Nudge, like you mentioned, Jeremy, who used to help run engineering at Neuralink, and Fred Ursim, who was one of the co-founders of Coinbase, who are working on these very unique missions. I can't think of anyone else who is using a non-invasive ultrasound to stimulate brain activity like Nudge and try to cure neurological illnesses like depression, pain management,

• 29:16Speaker 00

  addiction, et cetera, and who are doing them in ways that are going to be very, very hard to replicate in the future. And I think those companies that can actually solve the problems we're looking at are going to be valuable no matter what.

• 29:27Molly O'Shea?

  Okay, let's talk about Nudge.

• 29:29Speaker 00

  Let's do it.

• 29:29Molly O'Shea?

  Because you brought it up, and it's really fascinating. Tell me everything.

• 29:35Speaker 00

  Well, I'll tell you all the public things. I think the nature of real estate technology companies is you want to make sure that the the correct secrets are kept secret. But and the way I would think about Nudge is the human brain is basically one of the last frontiers of engineering. For a long time, it's been considered a science problem. You're something where we'll study it in the clinic, we'll study in the lab, but we don't really build products for the brain, the same way we might build products for other parts of the economy or even for human health. And Nudge is taking the approach of what if we could engineer the human brain or bring engineering solutions to the brain's problems? And I think for a problem like that, you want people who I describe as life's work founders, people who, no matter how much money they have, no matter what island you

• 30:19Speaker 00

  put them on, only have one missionary purpose and life in mind. And I think Jeremy and Fred are both that. Jeremy, like I mentioned, one of the early employees and key leaders at Neuralink, another really amazing neurotech company. Fred was actually one of the early investors in Neuralink and obviously built an incredibly successful company with Coinbase. And I think they are both convinced that the most important thing they can do with their lives is go and actually build a solution to neurological illnesses. So how does Nudge work for those who haven't heard of it, which I imagine is most people right now, but hopefully not very many people in the future? So much like we use ultrasound to image pregnant women, you can use ultrasound waves to actually simulate brain activity.

• 31:04Speaker 00

  They're very safe. If we're comfortable taking images of babies, we should be pretty comfortable using them on ourselves. And so what Nudge does is it will take ultrasound waves, it will direct them at very, very specific points in the brain that they've identified as being associated with some type of neurological problem and use those waves to stimulate the brain and actually change the neurological activity that's going on there. And ultimately, the goal is how do you have a treatment for neurological illnesses that is easier than taking a pill? Imagine if we could treat really, really tough illnesses like depression, addiction, by you wearing a set of headsets on your temples? And that actually doing meaningful amounts to cure versus struggling with an illness over a prolonged period of time.

• 31:49Speaker 00

  So really inspiring mission. The company is early but moving really, really fast. And so if there are any engineers out there that are excited to work on engineering the brain, I think one of the best places in the world to work.

• 32:01Molly O'Shea?

  So what's the, for most people, what's the difference between Neuralink and then also just traditional like clinical brain simulation?

• 32:09Speaker 00

  Yeah, so Neuralink, really amazing company as well. You know, I think incredibly highly of DJ and Elon and the entire team there that have done huge feats of engineering. I would think about them as, you're starting with the read side of the brain, understanding the brain. They use a invasive neurological implant. So if you are a paraplegic or someone with ALS, they will implant a device into your brain with a very relatively easy surgery. They've automated to a high degree. And as of today, this gives you what is called telepathy in classic cool Elon terms, which is to say, I can now control any digital device with my brain.

• 32:51Speaker 00

  And for people who have paralysis to that degree, this is a life-changing experience. You can imagine you have ALS, you actually no longer able to speak, you can communicate with your loved ones for the first time. You were paralyzed in a ski accident. You can now actually go back to work and do meaningful economic work for the first time by interacting on a computer. So they're on the read side. Over time, I think they'll actually do a number of things that are really helpful on the right side too. You know, things on their robot like blind sight, which they're going to try to restore, sight to the blind. You can imagine things that are actually going to try to restore limbic motion. So basically biblical miracles, pretty amazing. We live in an era where this is possible, mostly on the stimulation side.

• 33:34Speaker 00

  So they are not so much reading what is going on in the brain and interpreting it, but actually targeting specifically affected areas of the brain and trying to stimulate it. And so the closest comparison that we have to this today in modern medicine is something called TMS, which is transcranial magnetic stimulation, where this is really a version.

• 33:54Speaker 00

  Of what you might have seen the movies called electroshock therapy, where people will more or less use electrodes to zap the brain. It's actually pretty effective. It is very unpleasant. And I have not personally tried it.

• 34:09Molly O'Shea?

  What kind of diligence is that?

• 34:10Speaker 00

  I know, I know. Totally slacking here. Did you try it before the podcast?

• 34:15Molly O'Shea?

  Yeah.

• 34:15Speaker 00

  Yeah, you did. And you must be a big believer in Nudge then.

• 34:19Molly O'Shea?

  I love Nudge.

• 34:20Speaker 00

  Excellent. But in case, oftentimes, people have to do this treatment over many weeks. You have to go to clinics very far away from where you work. And so the, what's called the second line adoption of this treatment, the number of people who will try this after your first line treatments in depression fail is very, very low because no one wants to do this. And so not only do we think that ultrasound can be more effective than TMS, but you're wearing a pair of headphones in your head, way easier than going to a clinic to get zapped. So I think hopefully evidence that this is not only possible, but there's just a much, much better way of doing things.

• 34:54Molly O'Shea?

  Will you try it?

• 34:55Speaker 00

  Nudge? I'd love to. I mean, I think it's one of the exciting things about Nudge is that you can imagine a world where everyone should use Nudge. Because today they're treating neurological illnesses, but if we can stimulate the brain to get desired outputs, why should I be able to simulate my mood? Or my energy levels? Or maybe my focus levels? And so I think there is a world where actually when we do this podcast again in 10 years, we're both wearing headphones on our temples and we're getting us really dialed in to ask great questions to each other.

• 35:28Molly O'Shea?

  Everything is computer.

• 35:29Speaker 00

  Exactly.

• 35:31Molly O'Shea?

  That's really funny.

• 35:34Molly O'Shea?

  I want to take a step back a little bit and talk more on the funds thesis and the thesis on concentration. So Peter Walker, just recently, he's a researcher at Carter. He recently shared this chart that showed spray and pray versus highly concentrated funds. Turns out, highly concentrated funds typically like 20 companies per portfolio outperforms spray and pray, but spray and pray looks pretty good. Cause you have lots of potential bets. So I'm curious with rumored and reported, maybe it's not reported, maybe it's rumored 25 billion in AUM, how do you guys think about where to concentrate your bets?

• 36:16Speaker 00

  Yeah, I think there are two aspects that really matter to you, which is one, you have to pick a strategy that is authentic to how you want to operate as an investor. My partner Kareem often has the line that mathematically, there are probably a lot of ways we can make money as a venture firm. The question is, what feels really aligned to the founders we partner with? And I think above all else, I can talk about why concentration, we think is really great financial strategy, and I will, but the most important thing is it allows us to be really deeply aligned with the founders we work with. If you are working with a life's work founder, this is a portfolio of one for them. And we may have a portfolio of a few, but we really shouldn't have a portfolio of that many, because all the wins should really feel great and all the losses should really hurt and we should have real skin in the game.

• 36:58Speaker 00

  And so I think the way we like to set ourselves up with is that if we're going to invest in someone, they should really believe that the success and failure of a company really matters to us as investors. And so I think there's actually an emotional and ideological aspect to this. Now, there's also just a reality of the power law, which is that I don't need to document this for you. It is very clear that a small number of companies drives a disproportionate amount of the economic and social value in the world. I think right now I'd have to check the latest stats, but the mag seven, the NASDAQ, the top seven stocks represent 50% plus of the NASDAQ's market cap. And so that that gives to show you that few companies, really, really important. And so our concentration strategy just sort of reflects that reality.

• 37:42Speaker 00

  We want to invest in a small number of companies that are on the right tail of the distribution, the power law, that are going to be the most important to how the world works over times. And that's not to say there aren't other great companies that might make us money we can invest in with a more index-like approach, but the way in which we think we can deliver differentiated, correlated returns for our partners is through investing in the very best companies. And once we think a company is of that stature, concentrating as much capital into that company as possible.

• 38:11Molly O'Shea?

  Perfect tee up. Okay, we're gonna talk about OpenAI.

• 38:14Speaker 00

  Great.

• 38:15Molly O'Shea?

  I pulled from Patrick O'Shaughnessy's original interview with Josh way back when, and Josh said, concentrate on the most exceptional businesses and hold on to them over time. Case in point.

• 38:26Speaker 00

  Yeah.

• 38:26Molly O'Shea?

  Concentration strategy. But I also was able to find some data that OpenAI rounds reportedly led by Thrive Capital date back to 2023, and this was like right around inflection point and like the ChatGPT moment. So that started in January 2023 at a $29 billion valuation. Next step up was February 2024, an $86 billion valuation. After that, October 2024, $157 billion valuation. And then most recently, October 2025, hitting a $500 billion valuation. So how did you get involved in OpenAI?

• 39:07Speaker 00

  Yeah, I think people probably overestimate how popular the company was in its early days, if we want to be perfectly honest. I think Sam and Ilya and Greg and everyone else at the company worked on this project for seven, eight years before others realized how valuable it was. And so actually, if you want to go back to 2022, it's clear OpenAI was a really exciting company. We had been spending time with them for many, many months. Josh had known Sam for a long time. We actually got a demo of GPT-4 in November of 2022 before it was publicly released in March, and it was one of the most astounding pieces of technology we'd ever seen. I think these days, there's a lot of talk of what is AGI? What is an AGI? You know, we could debate that here if you want.

• 39:53Molly O'Shea?

  Debate it right now.

• 39:53Speaker 00

  Right now.

• 39:55Molly O'Shea?

  What does it mean?

• 39:55Speaker 00

  What does it mean? You and me both have it stumped.

• 39:58Molly O'Shea?

  Okay, okay.

• 39:59Speaker 00

  But the thing that was definitely true is that that model passed the Turing test. You know, there was all this talk for many years of the Turing test was this really important moment. You wouldn't be able to recognize it or a computer that was capable of acting like a human or having the intelligence of a human. GPT-4 was that, and we don't talk about it anymore. But that was a really important moment in technological history. And that felt really exciting. At the same time, I think a $29 billion valuation or thereabouts is undoubtedly a high price for a company that ChatGPT hadn't even launched for. And so when we invested in OpenAI in that round, I think we were one of two firms that gave the company a term sheet. And this was actually, I think, more an artifact of an investment that required

• 40:43Speaker 00

  belief than sort of competitive edge, so to speak. Now, if we fast forward course of three-ish years from now, and from there, so much about the company has changed. We looked at our original investment memo, there was no mention of ChatGPT in there. Now it has more than a billion users and is on its way to becoming one of the most dominant and important ways in which people access technology, the internet, AI. I think it's the front door to AI in many ways. And the company has totally changed in that sense. And as a result, I think when you see these new levels of value get unlocked, you're able to have real confidence in the dominance of the business and its centrality in the

• 41:25Speaker 00

  arc of technological history, yeah, your confidence in the company should increase. And yeah, you should invest a lot more in the company. And so I think the past few years have basically been a story of us having a front row seat to that and getting to see this arc unfold up close.

• 41:40Molly O'Shea?

  I think one of the probably most impressive things to come out of it is the team.

• 41:47Speaker 00

  Yeah.

• 41:47Molly O'Shea?

  Because everything that they've pushed out would seemingly be a tremendous force. And they continually do it over and over and over again. This is something I talked about with Apur from Ultimeter. They're also investors in OpenAI. And it was almost, not so much as momentum as a moat, but speed as a moat and continually pushing things out and trying things. And it went back from like voice to text, text to voice, like all this kind of stuff. And it seems like every month, every week, every day, there's something new coming out of that company. And so how do you think about how they have recruited, they've assembled team and the talent around it?

• 42:30Speaker 00

  Yeah, I think one of the great privileges of my career has been able to spend time with the OpenAI team. Not just because they're great people and brilliant thinkers, but the talent density, as you're pointing out, is really unprecedented. And there are good reasons for this. If you are building what I think is one of the most important technological innovations since the atomic era, forget the internet. Yes, a lot of the really brilliant people in the world are going to go work on it. Now, I think the really cool thing about OpenAI is they've attracted a lot of the star power researchers. You know, Ilya literally invented AlexNet back in the day, which kicked off the deep learning revolution.

• 43:09Speaker 00

  But a lot of the really great researchers at OpenAI have come up through OpenAI and were not famous entities or well-known people before. But Alec Bradford, who was at the company for a very long time, famously did not even really study AI when he was a student and was one of the most prolific and impactful researchers at the company. And I think one of the other things OpenAI has done really well is they've actually looked for young talent in the AI era. I think this is a really important thing. And one of the things that Cursor has actually been really attuned to as well is the people who almost hold the model weights in their brains because they've been brought up thinking about AI natively are really, really good at the creative thinking and experiments and hypothesis testing that is necessary to push the performance of these models.

• 43:54Speaker 00

  There's Sora, a recent OpenAI product launch. I think if you looked at the average or median age of that team, I think it's in the low twenties. It's pretty amazing. And so, long way of saying, OpenAI, one, has the benefit of, yeah, if you're a great computer scientist, you probably should be working on building some type of superintelligence. And two, they've been really risk forward about trying to find people who could be great versus who are already great. And I think that has actually allowed them to bring up and train several generations of great researchers in the company itself versus just needing to hire the people who have already been proven entities.

• 44:34Molly O'Shea?

  How do you think about the evolution of OpenAI and where it goes to? One of the sponsors that...

• 44:43Molly O'Shea?

  Proudly sponsored sorcery is Turing. And so I've gotten, I've gotten exposure to the AI research side of things or AI research accelerators. So they help out with the models.

• 44:52Speaker 00

  Yeah.

• 44:52Molly O'Shea?

  And right now they're noticing the severe shift in the last like quarter or two on imitation data, synthetic data to reinforce learning. And so I'm curious how you're seeing it on like the technical side and then also like on the application side.

• 45:07Speaker 00

  I think AI is a little bit like semiconductors in the sense, if I'm allowed to go back to semiconductors, the great touchstone. And that's in the sense that there are many, many waves as we're trying to get better and better performance. You know, with semiconductors, we used to have, you know, single core semiconductors. Then we couldn't basically squeeze anything more of a single core. So we went to multi-core and then we went to GPUs. I think we're seeing something very similar with AI, which is that, you know, we started with pre-training back in GPT one, GPT two era, GPT three, that took us to GPT four. Then, you know, we started using a lot of post-training techniques for chat GPT, supervised fine tuning, reinforcement learning with human feedback. And this is what allowed the models to be less alien intelligences and more helpful assistants.

• 45:52Speaker 00

  And anyway, now as a lot of the low-hanging fruit for those gains have been squeezed out, even though there's probably a lot more to do, reinforcement learning has been sort of the next big paradigm shift in AI and where a lot of the resources are going. My guess is there's going to be a couple more of these. This is not the end of the story. We are basically figuring out in real time how to do the alchemy of turning pieces of metals into, you know, thinking machines, so to speak. And that is a really tough and challenging thing. And I think the really exciting thing about OpenAI is that, yes, it's one of the great product companies of today, but it's also a research effort. These are not things that we have fully discovered and figured out yet.

• 46:34Speaker 00

  So I think a long way of saying the ultimate competitive advantage for the labs and for OpenAI in particular is actually being able to constantly figure out what the next paradigm is, even as you're productizing and implementing the last paradigm. And I think one of the highest testaments I can give to OpenAI is that every single major paradigm in large models at this macro level that has been very successful to my knowledge has come from OpenAI or at least been originated at OpenAI. And I think that speaks really strongly to their ability to continue to push the frontier of research going forward.

• 47:07Molly O'Shea?

  One of the lines that comes out of Cursor is what comes after code?

• 47:11Speaker 00

  Yeah.

• 47:12Molly O'Shea?

  What comes after OpenAI?

• 47:16Molly O'Shea?

  That's the question for you.

• 47:18Speaker 00

  I think the beauty is, one, hopefully, OpenAI is going to be an enduring technology. And so I'd be very surprised if in the near term, we were talking about an after OpenAI. You know, is there an after Meta or an after Google? I think the the better framing of the question, if I could tweak it, would be

• 47:36Molly O'Shea?

  Feel free.

• 47:36Speaker 00

  Something like, um, what are the companies that can now be built as a result of OpenAI? I think there is a what comes after SaaS? That is a more interesting way of thinking about this. And we had an old way of building software. There are these cloud primitives. We build these great digital apps on top of them. Lot of really amazing companies that we had the privilege to invest in. Now there's a new substrate for technology, which is what if you could productize intelligence? And call it via API or fine tune a model with it? And I think that engenders an entirely new breed of software companies. So I don't think it's an after OpenAI. I think it's an after SaaS that we're going to see. And so, you know, we're seeing the early signs of this, something like Cursor, where we're actually thinking about products that can work with you as a as a sort of collaborator

• 48:21Speaker 00

  in order of creating work. Um, we're seeing this with products like Harvey on the legal side, where they are doing work as well as just acting as an assistant. We're seeing this with products that are even incumbent products. You know, Wiz, for instance, now has a security assistant to help you find and triage vulnerabilities. Um, but I think there basically is a new set of building blocks that we've gotten. And I think the right way to think about it is software is going to look very different going forward. Um, but, you know, the big fundamental companies, I think they're going to be around for a while.

• 48:51Molly O'Shea?

  The other standard second order question of this is impact on jobs.

• 48:57Speaker 00

  Yeah.

• 48:57Molly O'Shea?

  CalShe recently had a chart out, um, that was up to 86% thought we would have more layoffs this year in tech than in 2024.

• 49:06Speaker 00

  Hmm.

• 49:06Molly O'Shea?

  How do you and there's also

• 49:07Speaker 00

  How's that going?

• 49:08Molly O'Shea?

  I don't think it's, yeah, I definitely take the under, but, um,

• 49:14Molly O'Shea?

  Public companies have been reporting more layoffs. It's part of like a natural cycle and et cetera, et cetera. Do you think that AI and these tools will create more efficiencies, create new jobs? Where are you in this whole discussion and debate?

• 49:28Speaker 00

  Yeah, I'll give you my bottoms up and top down answer. My bottoms up answer is I'm an investor in a lot of companies that use AI tools. I cannot think, especially on sort of the coding side and engineering side, of a single one that has laid off engineers because of these tools. I think maybe it allows them to grow without adding quite as much headcount, but really what it's done is allow them to go after a much wider range of problems. You can actually make everyone the 10x or proverbial 100x engineer in a really exciting way. And so thus far, I think just empirically, will there be some turnover in economic centers? Of course, there always is, but it's actually been much more of an augmenting technology than a substituting technology. And then I think as we look into the future and look beyond just, you know, cursors of

• 50:12Speaker 00

  the world, but to this notion of what does it look like to have very powerful, intelligent AI more generally, there's just a lot of problems that as a species we aren't working on right now that we should be working on. You know, way more people should be working on cures to oncology. Way more people should be thinking about what does it look like to actually sustainably mine the world's natural resources? What does it look like to actually make us, you know, a spacefaring species? And I think the beauty of AI is that we're going to be able to reallocate a bunch of human brain power, firepower, creativity to these most important problems and away from the things that, you know, have been great jobs to date, but are not the highest marginal use of humanity's creative and intelligence potential.

• 50:56Speaker 00

  And so I think there's just a lot of problems left to go solve and AI is going to help us solve the most important of these versus less important problems.

• 51:03Molly O'Shea?

  Where do you stand in the AI bubble debate?

• 51:07Speaker 00

  I think this is one where being concentrated allows us to feel a little bit better about no matter how the world works out, you're going to be in the right circumstances. And it turned out that if you invested in Google in 1999, in 2001, in 2004, in 2005, and you were a long-term investor at Google, you might have had some variability in returns. It was a pretty great investment. Likewise with Amazon, likewise with Netflix, likewise with Microsoft. And so I think we really just think about what are going to be the enduring companies versus trying to time the market cycles. So that's my honest thought. I think there's a lot of value will be created out of AI. I actually think in a lot of the rounds we participated in, they felt eminently rational to us. But I think the most important thing

• 51:52Speaker 00

  is be in the right companies and trust that if you've picked the right companies and want to be the multi-decade holders of those companies, the rest will wash out.

• 52:00Molly O'Shea?

  And where do you stand on the exit environment for this? OpenAI is one of, if not the highest valued private companies. So do you go public? Can you? What do you think about this in front of private companies?

• 52:13Speaker 00

  When we invest in companies, it is almost always with the intention that if they want to, they can at some point be a standalone public company. I don't know OpenAI's particular plans for this, but I think we should expect that most great technology companies will be public companies over time. Probably takes them, in some cases, a little bit longer than in the past, in some cases maybe shorter. But I think beautiful American capitalism is that everyone gets to participate in the growth story of these really important economic engines. And I think we think that's morally the right thing to do. And also, we think this is how most companies will choose to represent themselves over time.

• 52:51Molly O'Shea?

  Interesting. Well, if you didn't know this, sorcery sponsored by Brex.

• 52:56Speaker 00

  Awesome.

• 52:56Molly O'Shea?

  Amazing.

• 52:58Speaker 00

  I'll throw out my ramp card in my pocket right now.

• 53:01Molly O'Shea?

  Do it. Thank you. That's so generous. So Brex is all about spending smarter, moving faster, performance. I'm really, really curious about this question. Because Thrive is such a stealth fund, a huge fund, and you do a lot of different things from incubations to funding very large rounds of companies, how do you think about performance as a team? And like, how do you think about performance as an investor on a very small team?

• 53:26Speaker 00

  We think about decision processes a lot more than near-term outcomes. I think when I worked at Bridgewater early in my career, Ray Dalio had this very famous line of focus on the swing, not where the ball goes. And I actually think that's very much how we operate, which is that we want to have the shot on goal with the most exciting companies. We want to have the right conversations around those companies. We want to be, as my partner Miles likes to say, paranoid but patient, always thinking about what could be, but not necessarily rushing into things. But I think that structure is really what we anchor to. We have seen plenty of companies that didn't look like they went anywhere for the first few years. If you were an investor in OpenAI, and when it was a nonprofit in 2017 and 2018, and even

• 54:10Speaker 00

  sort of a capped nonprofit with profit-like shares in 2019 and 2020, you might have thought, oh, my gosh, what is this thing going to do? Is it going to go anywhere? And of course, now, one of the most valuable companies in the world. My contrast, I'm sure we could think of plenty of companies that looked hot coming out of the gates at first and at some point looked less good thereafter, which is all to say, when we make decisions as a team, is that no matter what performance looks like for this company in the next one to two years, we're going to be confident that we made the right decision because we looked at the right inputs for this. And so I think the worst types of investments to make are investments where if the numbers change one quarter or one year, you all of a sudden start to feel bad about the company.

• 54:55Speaker 00

  Because that suggests to me that you're not investing because of the fundamentals of the company, you're investing because of the momentum of the company. And I think that is rarely the right way to capture really long-term value.

• 55:05Molly O'Shea?

  We were kind of joking about this in the beginning, but I don't know what date it is, you don't know what date it is. I thought it was February, it's apparently almost November. But what are you looking forward to in the next 12 months?

• 55:18Speaker 00

  Great question. First off, I think we're in this moment where reinforcement learning, as you mentioned, is this new lever. But we've seen it make its way into very few new software products. I think a few products in the labs, rumor has it, some of the coding companies like Cursor have done some really cool things that they've mentioned on their blog. But relatively speaking, not that many RL problems and then projects out there in the world right now in production. I'm really excited to see that change. I think it's one of these really powerful things where we now have a lot of the inputs required to go automate large amounts of really high, treacherous work. And I think we're going to see software companies start to productize that over the coming months and years. So that's one thing I'm really excited about.

• 56:03Speaker 00

  I think the other is the point of intelligent hardware. I think we're going to see a real renaissance of problems that don't just have to be solved with bits, they can also be solved with atoms as well. Sometimes to make a real impact on the world, you actually need to move something in reality. And so we're investors in physical intelligence, you're doing this on the robotics side. We've talked about Nudge, talked about MASH, talked about Androl. But I think we're going to see a new wave of companies that can actually address the large swath of global GDP, well north of 50%. We're actually affecting the physical world really matters. And then finally, I think there are going to be some really exciting developments in applying AI to science. There's Isomorphic Labs, which Thrive is a very proud investor in, which is Alphabet's

• 56:48Speaker 00

  drug discovery and life sciences AI portfolio. There's a new company called Periodic, which is working on material science, which we are not an investor in, but is doing really awesome work on new materials discovery. And I think there's this cool question of at what point, similar to our discussion on Nudge, do science problems become engineering problems thanks to the power of AI? And I'm really excited to see how that transitions and evolves over the next few months.

• 57:13Molly O'Shea?

  It's a lot to look forward to.

• 57:15Speaker 00

  I know, we're a really exciting time.

• 57:16Molly O'Shea?

  It's really exciting. Philip, thank you so much.

• 57:18Speaker 00

  Thanks for having me.

• 57:19Molly O'Shea?

  Hey, it's Molly. If you enjoy our interviews, check out our newsletter, sorcery.vc, where we deliver a once a week top deals and tech headlines email and also go deeper on our podcast interviews. Subscribe to Sorcery today and don't forget to subscribe to the podcast on YouTube, Spotify, Apple, or wherever you listen. Link in description to sign up.