Uncapped #53 | Trae and Delian from Founders Fund

Trae Stephens is a Partner at Founders Fund and co-founder and Executive Chairman of Anduril Industries, a defense technology company building autonomous systems for the U. S. military and its allies. As of May 2026, Anduril is valued at $61 billion. Prior to co-founding Anduril, Trae was an early employee at Palantir Technologies, where he led teams focused on the intelligence and defense space. Delian Asparouhov is a Partner at Founders Fund and co-founder and President of Varda Space Industries, a company manufacturing pharmaceuticals and advanced materials in microgravity that can't be made as effectively on Earth. Delian was a Thiel Fellow in 2013 after dropping out of MIT computer science. Prior to Founders Fund, he was Chief of Staff and then Principal at Khosla Ventures under Keith Rabois, and before that founded Nightingale, a healthcare startup backed by Y Combinator. We discussed what makes Founders Fund's culture uniquely truth-seeking, from its 1% personal co-invest requirement to a structure with no partner meetings and no residual economics. Trae shared why he believes Series A boards are largely a waste of time, while Delian reflected on working alongside Keith Rabois and eventually striking out on his own. We also explored their concerns about today's market, how Founders Fund navigated the 2021 bubble by concentrating on its two strongest companies, and why macro timing rarely works in venture. The conversation closed on America's semiconductor challenge and why a Taiwan conflict may be more likely than many assume. --- Timestamps: (0:00) Intro (0:54) What makes FF unique (8:01) Lacking EQ can be an asset (12:10) Delian on working with Keith (18:30) Why Trae hates board meetings (24:13) Benchmark vs. Founders Fund (26:31) Investing as the exhaust of operating (28:52) Venture as a micro asset class (30:42) The infamous 2021 offsite (34:21) Current market sentiment (39:18) Can you beat the S&P? (48:53) America's semiconductor blind spot (51:56) Taiwan and the 90% probability (57:58) Robotics, humanoids, and the China question --- Links: https://x.com/traestephens https://x.com/zebulgar https://x.com/jaltma https://x.com/EverettRandle https://uncappedpod.com/ [email protected]

• 0:00Speaker 00

  It is less important to be exactly true than it is to be directionally true, because it's really hard to shift the overton window. Most people are like, they try to like sort of moderate their approach to something. Because of that, they're not directionally pulling hard enough to shift any strategy. Whereas I think Peter is just like, I'm gonna get like super, I'm gonna dig in my heels on this.

• 0:22Speaker 01

  Just to move the window.

• 0:22Speaker 00

  Just to move the window a little bit. And that tiny adjustment that ends up being made is really powerful. All right, well, very excited for this. What a crew we have here. Delian, you excited to be here? Oh, yeah. Yeah, I've been looking forward to this for a while. In the lines, then. A hundred percent. It's, it's gonna be hard. Oh, sorry, Tiger Den. The Tiger Den. Yeah, that's right. Can we run that back?

• 0:46Speaker 02

  There was a lot of discombobulated commentary there.

• 0:51Speaker 00

  We're gonna try to have a serious conversation.

• 0:53Speaker 01

  That's gonna be this whole two hours.

• 0:54Speaker 00

  No, I got to do this with Trey and that was amazing. We wanted to bring it all together. My first question is actually for Ev. And we're gonna start in a really positive place. We really respect what you guys have done and what you do as a firm. I hope that's the same. But Ev, you've worked at both. You've talked a bunch about like what makes Benchmark unique. I've obviously gotten to hear a lot about that from you, but I'd be curious for you to talk about what you loved about Founders Fund. Maybe compare it a little bit to like what's different from other places, maybe Benchmark. But I'd just be curious for you to start here.

• 1:20Speaker 01

  I think when people that aren't in the investing business think about what investors do and like what the day to day or like what an investment committee looks like within a venture firm or any investing firm. I think they have this, this idea in their head that like, you know, the team comes together. They've done a bunch of research. They've done a bunch of work. And they have this like very intellectually honest debate about the merits and considerations of the investment. And like weighing the risk reward and then coming to some like intellectually perfect decision about that investment, given all the information that they've gathered. And that's just like not how basically any firm actually operates. There's so many other, you know, politics or organizational structures and incentives that like push you away from this like truth seeking place.

• 2:03Speaker 01

  And so I think that the really unique thing about Founders Fund that, that when I came in, I thought was just so amazing and unique. Because like not only that it was like a culture that bought like truly bought into the like process of truth seeking and like really putting like truth seeking on a pedestal above like, you know, the the hierarchy of who's a GP and who's not a GP or any of these other things. But then also there was like even like organizational incentives and structures in place to like keep that the same. Basically, no matter who is, you know, in the halls of of Founder's Fund. To the one that that I've I've mentioned before is this like 1%, you know, like the 1% mechanism or provision or whatever, whatever it's called, which is for any investment

• 2:45Speaker 01

  that you do at Founder's Fund, 1% of that investment on a dollar basis is set aside for the people that worked on the investment to basically angel invest up to 1% of the total dollar amount. And it's not just like some, you know, workplace benefit. The entire idea of that mechanism is to basically measure the conviction of the partners or the investors that are sponsoring a given investment.

• 3:08Speaker 02

  You guys still do that?

• 3:09Speaker 01

  Yeah. Like if somebody doesn't want to do it, are you, is that like a thing?

• 3:12Speaker 02

  No, I think like it's, it's really important to be mindful to liquidity constraints, obviously, like, you know, people on the team have very different personal financial situations. So it's not super prescriptive, but it is like a useful tuning because you you don't have to do the full 1%.

• 3:30Speaker 01

  Yeah.

• 3:31Speaker 02

  You can split it up between the different parties working on the deal, or you can say like, hey, I have five grand or whatever that I I want to put towards this. It's not a signal of lack of conviction. It's just like this and liquidity constraints.

• 3:42Speaker 03

  I think it's more helpful like on an individual comparative basis. Like if you're known for doing lots of 1% and on this one, you're choosing not to.

• 3:47Speaker 01

  Right.

• 3:47Speaker 03

  People will ask, but it's like, if you typically don't and then don't, that's not necessarily a signal.

• 3:52Speaker 01

  Are there any other like incentive aligning mechanisms like this that you guys have gone? Or what would you, I guess, what would you to ascribe, obviously, you've been at Founder's Fund much longer than than I was. What would you ascribe? And do you agree that like the the thing about truth seeking kind of being like the highest calling of of the team and like, what do you ascribe that to? If it's cultural, if there's organizational things that lead to it?

• 4:12Speaker 02

  You know, when I first joined Founder's Fund, as you guys know, like I I didn't have any interest in venture capital. I just ended up there because Peter basically told me that I was going to do it and I wasn't clear that I had an option. I love that. That's the best kind of recruiting process. And so I, when I showed up, I kind of didn't know what I was doing. And I had this like hypothesis that venture capital was going to be more like what you said. It's like this diligence exercise. And you meet with hundreds of companies a year and you know, you do like a deep process on each of them. And the hard part is making the literal investment decision. It's like not what it is at all. It's like there are tens of thousands of companies that are raising at any given point.

• 4:54Speaker 02

  Ninety nine percent of them are obviously knowably bad within a second. And so really it's about access and finding the super high conviction things that you want to pour your energy into. And I think that's like, really what makes Founders Fund unique is that we're just very internally honest about that. And if you're not personally super high conviction, I really want to do this deal. I'm going to fight for it. I'm going to be willing to argue. I'm going to be willing to like, put my reputation on the line, disagreeing with Peter. If you're not willing to do that, you're just never going to get a deal done. And so that's really all it is at the end of the day.

• 5:32Speaker 03

  Yeah, I spent a little bit of time early in like my venture career at KV. And one of the things that I find very uniquely different between you sort of the two models is NFF, so much more of what we do, and I'd have to look at it on like a dollars basis or deal count basis, but there's so much more that I feel like, like sort of rises from below, if that makes sense, where it's like individual team members that have like, you know, sort of really strong conviction and then are steadily presenting that case to other colleagues and working their way up. And then, you know, at FF, still every check above a meaningful size requires Peter's approval. But it's almost always like that person steadily, you know, sort of gaining conviction and convincing others, and then eventually presenting that case to Peter, much more so than like top down, Peter saying like, we need to go invest into, you know, sort of this thing.

• 6:13Speaker 03

  And I think that creates some like truth seeking by default, because there's such high like activation barrier of Peter's got many things going on, Trey's got many things going on. And so if you're going to take up, you know, sort of their time, especially because like venture is not the only thing that they do, you're going to want to have a really compelling case as to why versus at other places where like the GPs are really full time, only investing GPs. I find that they also like are the ones leading a lot of the investments, you know, sort of themselves, which I feel like that's like less the case at FF.

• 6:43Speaker 02

  The incentive thing is interesting. Like I feel like,

• 6:46Speaker 00

  One of the things I've noticed here that Evan and I have talked about is that like, because there's sort of like nothing at Benchmark to fight, like everybody's equal, you're never gonna get, you know, a promotion, you're never gonna get a raise. And so because a lot of that stuff is stripped out, it leaves there to be sort of nothing other than just try to make good investments and try to help your teammates make good investments. Versus I think at a lot of big firms, that gets like harder because there are other competing interests that people have. But I think Founders Fund seems to have avoided a bunch of that through a lot of these sort of mechanisms that we're talking about, like, you know, there's the 1% thing, there's the fact that like a lot of senior people are like crazy busy. But I also feel like you guys have a cultural thing where there seems to be something to it. Like I think, you know, Ev's talked about how like, you know,

• 7:31Speaker 00

  at a Founders Fund partner meeting, people can like get pretty heated over ideas or even maybe at each other. But like somehow at the end, like everybody still like really likes and cares about each other, which I think is like the inverse of that, which is like ruinous empathy or sort of just like toxic collegiality that I think is much more common where people like.

• 7:47Speaker 02

  Everyone's very polite.

• 7:48Speaker 00

  Very polite. And then after the meeting, they're like, look at that idiot. Like, I can't believe he thought that.

• 7:52Speaker 02

  I just think the EQ of the team isn't high enough to be able to operate in that way.

• 7:57Speaker 00

  We just got a little sprinkle of it. And so as a result, we, everybody just says what they think and moves on.

• 8:01Speaker 02

  Yeah, because I just don't think people are tuned to even understand how the things they say have like an emotional impact on other people.

• 8:08Speaker 00

  Would a super high EQ person not work particularly well at Founders Fund?

• 8:12Speaker 02

  Either that, or they'd be like really good at manipulating.

• 8:18Speaker 01

  One or the other. I'm not really sure. It could go either way.

• 8:21Speaker 00

  They'd never know.

• 8:22Speaker 01

  Yeah, they would never know. Yeah, exactly.

• 8:24Speaker 00

  Actually, can I ask, what is like Peter's interpersonal sort of, what's the experience? Because I think he, like, like, I could imagine you sort of saying this in either direction, but he clearly is deeply attuned to people in some important way. Is this thing you're describing about EQ, is that related to him? Is it different from him? Because obviously, you know, when you have a founder of a firm, of course, like a lot of the DNA is gonna to go through it. But like, does much of this kind of come from, from him?

• 8:49Speaker 02

  One of the things that he said to me very early on, we were talking about having kids and, you know, what we wanted for our kids and stuff. And we were talking about like intellect as being like one of these things that you as a parent think about wanting for your kid. And he said something to the. Like along the lines of, I think like 130 is like roughly the right IQ because anything over 130, there are too many trade offs. And I think that's like, sort of, you're like, you're not hiring people for their EQ or lack thereof. You're hiring people to have really high IQ that are able to hold their own, hold their own in these debates. And the reality is, is like, when you do that, there are trade offs.

• 9:30Speaker 00

  Right.

• 9:31Speaker 02

  And so we're kind of experiencing the result of those trade offs pretty often.

• 9:34Speaker 00

  Too smart for your own good.

• 9:35Speaker 02

  Yeah, or maybe it's exactly for everyone's good, because we don't have these like weird harbored politics and animosity.

• 9:43Speaker 00

  Yeah.

• 9:43Speaker 02

  At least I don't feel, I've never felt like that.

• 9:45Speaker 00

  Dalian before the pod told me that he can't stand you, but other than that, I think it's all, everyone likes each other.

• 9:50Speaker 02

  Of all people, I think Dalian and I are very cool with one another, so.

• 9:53Speaker 03

  I think like Peter deeply understands people, but like from like an intellectual framework level, like I think he's very good at like quickly understanding where is somebody biased, where do they have blind spots, like, you know, what are they good at, what are they not good at, in terms of like how his words will have like XYZ emotional impact, like, you know, Trey said, yeah, I think that, you know, sort of poor rat. But I think when it comes to like deciding on whether or not to make an investment, it's actually much better to understand, I think, somebody's intellectual capabilities versus the like emotional impact side of it. And I think also right now is probably amongst the best cultural states, it's been in the time that at least I've been there, but then even from the like history that I've heard. And I think there is a variety of reasons as to why that is, but definitely one of them is if you like, look at the, you know,

• 10:36Speaker 03

  call it median age or median tenure of somebody on the team, it's probably something on the order of like seven or eight years, which is, I think reasonably high relative to most years at venture firms, you know, amongst a spread of, you know, called 12 people that are there.

• 10:49Speaker 00

  Has the culture gone through like ups and downs? I mean, you've been there a long time.

• 10:53Speaker 02

  Oh, for sure.

• 10:53Speaker 00

  Does it, and do you think it matters? Like, maybe ask more accurately, what do you think the impact is of like good and bad cultures at various points in time? Because obviously you can make a great investment in the context of a terrible culture and vice versa.

• 11:03Speaker 02

  Primarily, it's like, can you retain the people that you have that are doing a good job? I think that's like ultimately the thing. Cause you're right, like you could have. You know, Bridgewater as like an example, like great performance, but I think it's a really hard place to work for a long period of time. Yeah, that's sort of the trade off that you're making at some of these funds. It's usually not like a systemic problem. It's usually like they're individuals inside of these systems that tend to sort of like buck against what the general expectation is from the team for like what they signed up for, if that makes sense.

• 11:37Speaker 00

  Yeah.

• 11:38Speaker 02

  Um, and then when they feel like there's been some sort of violation, things get, you know, they get dicey. Um, when I first came into Founder's Fund, it was definitely like people were kind of in their offices, staying very quiet, staying away from each other. And, you know, I was walking through the halls, trying to give people high fives and they were like, what's going on right now? This is really weird.

• 11:56Speaker 00

  Yeah.

• 11:57Speaker 02

  But then like things got really collegial and, um, you know, it, yeah, it kind of goes in waves depending on how people are vibing, how we're like adding to the team, whether or not we're like exiting rapidly when people aren't working out.

• 12:11Speaker 00

  Yeah.

• 12:12Speaker 02

  And just being like really honest with ourselves about what we want in the long run.

• 12:17Speaker 00

  Yeah, I was just thinking as you were saying that, like, um, you obviously worked really closely with Keith for a long time. And then you didn't. And I'm actually interested to hear, we've never talked about this, but like, what are your reflections on like, you had this like, sort of like apprentice relationship for, I don't know what it was, five, seven years.

• 12:33Speaker 03

  Yeah, five and a half years, six years.

• 12:34Speaker 00

  Yeah. You're kind of like doing your own now, you know, with him going back to close. So has that been like seamless and smooth? Like, do you reflect on that all a lot? Cause I think it's like, um, it was like an uncommonly sort of tight apprenticeship model. You don't see it all the time.

• 12:47Speaker 03

  Yeah, I mean, obviously like single biggest influence I've ever had on like, you know, sort of my, you know, sort of career. And I think that'll be the, probably the case for the rest of my life because it's just like, there's nothing that compares to those like early period where it was like, he was the only person that I basically like, you know, sort of worked with for like a really extended period of time. Whereas now even though like Trey and I work together a lot, it doesn't compare to like, yeah.

• 13:06Speaker 03

  I'm also not spending 12 hours a day, you know, with Trey, even like when we're most, you know, sort of collaborative. There's always this like talking point that I give to, um, founders or investors, which is within an operating company, there are actually like a like decent set of constraints that you have to, you know, sort of live. Buy, which is like you have to like serve your customers, you have to like fundraise, you have to actually hire talent, et cetera. And so if you were to like examine the cultures of Andro and Varda as an example, there's for sure differences, but in the grand scheme of like distribution curves, they're like probably not that different relative to the distribution curve that you see in venture. Cause in venture, there's effectively only like one rule, which is like IRR and make money. And then the rest is sort of like totally free form. And so if you were to compare the like benchmark versus FF cultures, my guess

• 13:48Speaker 03

  would be you'd see way more differences in that versus like XYZ to, you know, sort of top tier, you know, basically startups would actually be much more, you know, sort of similar. I do think that seeing Keith operate in these different environments, like very, you know, sort of closely with him. I do think like my, you know, sort of net reflection on it. And I think he would agree with this is like, I do think his work style, personality, how he likes to do things actually just does fit into how KV's culture, et cetera, like operates a lot better than I think it did like at FF. I'm not sure that would have been obvious without actually like literally doing what he did. And in some ways like sampling the two. And I do think also him coming over to FF helped fix some of the things that he wanted to get fixed at KV. So I think actually like the whole process and outcome was like the best for everyone all around. Obviously now not working with

• 14:31Speaker 03

  him like day in, day out is like an interesting experience where definitely like, you know, it took me some time. And I remember, you know, Trey and I went on this like super long walk, maybe like a week after it was, you know, sort of clear that that's where, you know, sort of things were headed. It had already steadily been happening over the prior year or two, where I was doing more deep tech. I was doing more, you know, sort of art of things, which were very not the like Keith fintech, et cetera type of things. The thing that made me comfortable with it in some ways staying was actually looking back at the prior year investments and realizing like of the people that like I worked with on like votes on a deal check, the prior year was actually 80% Trey and Scott Nolan. And it was only like 20% Keith. And so I was like, oh, well, like I'm already, you know, sort of doing this job.

• 15:04Speaker 02

  Out of the wing.

• 15:05Speaker 03

  Yeah, yeah. I'm out of the wing already, basically.

• 15:07Speaker 02

  The other thing that's worth mentioning about this is that like Keith stylistically is like a really good coach or mentor because he's very hands on. He's he like, he wants to do updates. He wants to, you know, get in the weeds with how something is going. That's like the opposite of really Peter and myself. Like we're not like that at all. Like I think I'm a terrible. Lead, like I'm a bad, I don't mean lead investor.

• 15:34Speaker 03

  I'm a board manager.

• 15:36Speaker 02

  Yeah, I'm like, I'm not, I'm not a good board member. I'm not a good manager. I'm not a good mentor. I just like, I'm not wired.

• 15:43Speaker 03

  Are you sure that that means not a good board member? Cause I think a lot of great board members are. I, I agree about the manager thing, but.

• 15:48Speaker 02

  I think it depends on what you're looking for out of a board member. If you're looking for someone that's like, gonna get their hands dirty and like, help you with things tactically, then it's probably, I'm probably not gonna be very good at that. If it's, you know, protect the founder and be an advocate for the founder and stay out of the way and don't create unnecessary friction. Well, yeah, that, I'm, I'm great at that. I'm great at not creating additional friction.

• 16:13Speaker 02

  But I, I think that like, it's just like stylistically, super different. Delian will reach out to me and be like, hey, there's a company that I would like your read on, or there's a question that I have that's hyper tactical, but like, am I going to reach out to Delian and be like, let's review?

• 16:29Speaker 02

  I don't know, I'm just like, it's just not, it's not me. And, and I think that maybe you got to the point where the thing that you legitimately got in, in droves from Keith was not something that made sense in the long run.

• 16:41Speaker 03

  I, I remember when I first started working with him, I would like describe it as like, you get to like, work with this person. It's like, one of the greatest of all time. And he has this like, knowledge tree through all the situations that he'd been with, the different business models, startups, founder conflict, like lawsuits, et cetera. In each situation that I get to like, observe him in, I got to see like, one branch of that tree. And then as you get to observe him over the course of six years, you kind of actually create the meta-layered tree. And it's like, ah, this is the tree of knowledge that like, works for Keith. And I've definitely like, adapted a lot, right? Like I would say, like, of my equivalent, it's probably like, 60, 70% is probably like, mostly overlap with Keith. And then my 30% is mostly just the like, I like a little bit more of the like, hardware-y, like physics-y, materials, like those types of things. But 70% of like, how I get excited about a seed round, how I operate with the founder afterwards.

• 17:26Speaker 03

  Like, I definitely still largely take a little bit more of the Keith style, like venture assistance role. Balance with like, you know, I'm deeply involved with artists, like I maybe can't quite do what sometimes, you know, sort of Keith does in terms of like, depth of involvement with companies.

• 17:37Speaker 02

  Yeah.

• 17:37Speaker 03

  But like, I definitely take a different approach to it than like, you know, sort of Trey, Trey and people.

• 17:41Speaker 00

  Yeah, like what you said about, you know, Keith Fitz beautifully at KV. He's like a particularly distinct personality. So maybe you see it more sharply with him. But I think like, we probably all are great in one environment and terrible in another. It's probably, you know, there's people who are being amazing founder for one thing horrific for the next. I think so much of like, life is like getting yourself into the place that you're supposed to be in.

• 18:02Speaker 02

  If I was at a venture fund where there was like an expectation that I take a board seat on the on the deals that I lead, like I would quit. There's just no way. I couldn't do it. I don't like being on boards at all, even for companies that I started myself.

• 18:17Speaker 03

  Even Monday partner meetings, if we had to do those, like if you told me that we had to sit. Yeah, we had to sit through like four, six hours of us like taking pitches all together and then discussing them all together and discussing the portfolio every single week. I think the entire founders fund team would quit.

• 18:31Speaker 00

  Yeah. Do you not like the board member stuff because you think the board member theatrics? Or it's because you're like, I made the investment and you should figure it out and I don't want to be part of it.

• 18:38Speaker 02

  Like, I've thought about this a lot. There are three things. The first reason I hate it is the board member theatrics. It's like people who.

• 18:45Speaker 00

  It's exhausting.

• 18:45Speaker 02

  Who believe that somehow they are better at running the company than the founder. And they like stand on a soapbox and try to convince everyone in the room that they're really smart. I, I.

• 18:54Speaker 00

  I hate when you say you're like, you're in a board meeting and like someone's there and they're like this. You could tell that they're like, this is my Super Bowl. Like I'm about to show up.

• 19:02Speaker 02

  I'm about to show up. Exactly. And also like if we, if you invested in the company, you should probably believe that the founders are the right people to run the company. Otherwise you shouldn't have invested. So that's the first, the first thing. The second thing is information density is at an all time low. A pitch meeting, I, in 30 or 45 minutes, I can like do a full dump of everything that I believe that I need to know. And if I have follow up questions, I can do that asynchronously or whatever. But I can't tell you how many times I'm sitting in a board meeting that's like scheduled for three hours. And it's like. Dude, we could have done this in an email. Like, just tell me what the numbers are. Tell me what your struggles are.

• 19:38Speaker 01

  Yeah.

• 19:38Speaker 02

  Answer a couple of questions. Let's get out of here.

• 19:41Speaker 01

  Three hour meeting is they had their whole exec team there.

• 19:43Speaker 02

  Yeah, it's crazy how low the information density is. And then the third reason is that I don't actually think that I'm adding a lot of value. And I don't like being in situations where I don't feel like I'm adding a lot of value. And so when I sit through this thing where I like sponge up a bunch of information, maybe I like interject one or two things. It's like, this is not only a waste of my time, it was a waste of everyone else's time to have me like, sit here and pretend that I'm gonna know the right things for you to do in all these moments.

• 20:11Speaker 01

  Okay, so you don't want to do it, but do you think venture should have people who do want to do it and are engaged and do the whole board member thing? Or do you think the whole construct's wrong?

• 20:21Speaker 02

  At some stage, I think you need to have governance. Like, there should be a board that serves a function. I think these boards are pulled together way earlier than they should be. Like, a series A company should not have a board. It's just really stupid. You know, what are you reporting on? Oh, we like built additional features into our product. It's like, who cares, dude? It's like, I don't.

• 20:45Speaker 01

  I can imagine you at a series A board meeting and they're like, yeah, we had a great month. You're like, I don't give a shit, man.

• 20:50Speaker 02

  I really don't care. It's exhausting. There's almost a perfect correlation between the funds or people that think you should have a board at a seed or a series A and the type of people you don't want on your board long term.

• 21:03Speaker 01

  Okay.

• 21:03Speaker 03

  I think the core thing at FF is for a decent chunk, especially with the venture team, we're constantly comparing it against just going to go work on our own companies. And so I just think the venture, the way that we view venture is very different where it's like, we are working on this because we're explicitly choosing to not work on the company, and so this better be very high value relative to somebody who's doing it full time that is like, well, I need to figure out some way of making myself feel valuable in this world. And so board member theatrics is one way of feeling good about it.

• 21:26Speaker 01

  Well, then you, you both have boards at Varda and at Endural. Do you feel like you've been able to take these things that you really don't like about boards and like, like, would you, how would you grade? Not to put you on the spot, but how would you like grade the work that you've done to make the boardroom at Varda and Endural?

• 21:40Speaker 02

  Massively condensed. Information density. That's like the number one thing is that there's no such thing as a useful three hour board meeting. It's like 90 minutes tops, only run through the most important stuff. Obviously you can have additional materials. So people want to dig in more deeply async, but keep it, keep it really, really tight. And Andrel, one other thing is that the, there are only three board members, me, Palmer and Brian, and we've controlled that. We don't want to have seven investors as board members because it just increases friction in a way that isn't actually useful for the company. From the third point on like my ability to add value, I feel differently because what Delian said, which is that this is also like sort of my full-time job.

• 22:25Speaker 02

  And like, I actually feel like I am doing the things that are most valuable for me to be doing personally with the company as chairman, as you know, a co-founder of the business. My biggest point of feedback to most companies is just on the information density side. It is crazy to schedule a two hour board meeting or a three hour, a four hour meeting. I mean, like if you can't do this in 60 to 90 minutes for an early stage company, like what are we even doing? It's just absolutely out of control.

• 22:54Speaker 03

  Trey's actually on like the, you know, sort of barter board. So he can maybe, you know, sort of grade how, you know, sort of we do independent of my assessment of it. I do think early on, we did a pretty decent job of yeah, keeping it, you know, sort of very dense. And now in the later stages, there's almost sort of like, I think of it as like three sections of the board meeting, where because we have sort of completely different customer sets from our DOW business and our pharma business, we typically end up doing like a DOW update and it's like basically just for Trey. Like no, because it's like, I mean, look, it's like, he's like one of the best DOW people of all time and definitely way better than anybody else on the board by like many orders of magnitude. And then even then we just did our last one yesterday and I'm sure Trey like midway through was just like, we were asking like, do you know this customer group? Do you know this? And Trey's like, nope, completely different than like where Andrel works and does etc. I can give like, you know, high level guidance, but like you guys are the ones that know this is kind of what I imagine was going through, you know, sort of the back.

• 23:39Speaker 02

  He also did the whole thing in 30 minutes.

• 23:40Speaker 03

  Yeah, it was 30 minutes. So we like, you know, ran through it, you know, sort of quickly. And then on pharma, we do find it incredibly valuable. Some of our external board rumors, including, you know, Samir from KV, where there on any particular deal, pharma asset, et cetera, there's just so many dynamics that it's like, actually honestly hard to have all of that internal expertise. And so there, I actually find it like, you know, deeply valuable. And then like third section is like ops, finance, et cetera. There it's like, yeah, it's where at our current stage of amount of capital raised, deployment, et cetera, it is helpful to have like some external governance on like even down to just like founder comp, executive comp, and just like, you know, getting external perspectives.

• 24:15Speaker 00

  This is another area where I would say benchmark and founders are like pretty opposite, where you guys are like, it's, you know, as much of the work as possible is on building. It's like in some ways, the investing is like, we'll do as much of it as we can, but it's kind of competing with, you know, operating in a lot of ways versus at benchmark, everything is designed so that there's literally nothing else to do but invest. And like, that's sort of like the goal almost is like benchmark wants there to be nothing for the partners to do, but make investments and work with those companies. You want it actually to be very hard to make investments.

• 24:45Speaker 03

  And you want there to be lots of things that compete for your attention that aren't investments, that are better things to do.

• 24:50Speaker 02

  Yeah, it's sort of like being professional at anything. It's like if you're a professional baseball player, you're gonna hit a lot in the batting cage, you're gonna take a lot of ground balls because that's what you're being paid to do. It's like you have to do it. And so if you're a professional investor, you're gonna feel like I have to be doing deals all the time. Now, the challenge is like having discipline around that because sometimes the right decision is not to invest.

• 25:11Speaker 00

  Right. And so if you're By the way, one good way to implement that is by saying, if you want to make an investment, you have to be on the board for the next, you know, 10 years.

• 25:19Speaker 03

  I mean, I would never make an investment.

• 25:26Speaker 03

  You're gonna pay 1,000x multiple on revenue and you're gonna be on the board for 10 years.

• 25:31Speaker 00

  2,000 hours of board meetings.

• 25:35Speaker 01

  Delian, you said something recently that did really resonate, which is like the investing side of things should almost be like an exhaust, or you see it almost as like a side hobby, or like an exhaust of what you already do in your operating day-to-day job at Varda. And I do think that there's like, even as like a mental framing, I was trying to frame that for myself. And it's like, in some ways, like, you know, depending on like the stage of investing that you're doing, like, you could see your job as like, I'm a researcher, and I am a networker with this group of people, whether it's like, let's say you're in cybersecurity, like cybersecurity experts, or whatever. And then the exhaust is that once in a while, I do an investment.

• 26:09Speaker 03

  There's this investment that we were just talking about earlier, that you guys met yesterday, this week, that we just led the seed round on, that I think is like a, like, perfect example of this, where it's just like, I, over the past couple of years, have just gotten deeply frustrated watching like cognitions and, you know, cursors, et cetera, of the world completely transform how like a backend software engineer at like a Ramp, or a Meta, or, you know, name your favorite software company, you know, significantly improve their productivity. And then you just look at the sets of tools that we like use internally at Varda for our firmware engineers, thermal modeling, et cetera. It's the same stuff that I was using in 2012, when I was building robots. And it's like, there's effectively no change. Like, the software's like slightly updated, but there's no improvement in productivity. And so I just started spending a ton of time looking at all the tools in that category. Some are now later-stage companies in our portfolio,

• 26:52Speaker 03

  like nominal, I think, is one of these that was like an early, you know, sort of example of this. But the one that you guys, you know, sort of met this week was this example of like, I was just so frustrated that there's this like very rote manual work that our junior mechanical engineers do, that felt like the classic type of thing that AI should clearly be able to not just like slightly improve the workflow on, but just completely remove. And then was like, I'd probably met at that point, maybe like 15 different companies that were like in this space, frustrated by all them. I met like the 16th one, and I was like, great, this is the one. Like, it's just the best founder, the best product, the best idea. And I was like, I want to invest. And it's like, I partially like doing it because I like doing the early stage, you know, get 10%, like, you know, start to be a little bit like that founder coach. But then I also specifically like it because it like solves a problem at work. Or another one that we like did together way back in

• 27:36Speaker 03

  the day, that is just one that solves a problem personally, is like, we both did Eight Sleep together back in the day. And it was not because like, we like had some deep hypothesis on like mattress markets, or anything like that.

• 27:45Speaker 01

  You're just like, I'm so hot in the middle of the night.

• 27:46Speaker 03

  I'm just so hot in the fucking middle of the night. And I'm just like, I don't want this to happen anymore. And this is a good product. And I remember at the time, we were like, we have no idea if this is going to be a good business. But like, it is a really good product. And like, typically over time, good products turn into good businesses.

• 28:00Speaker 01

  My memory is that I actually was

• 28:02Speaker 00

  I was crapping all over this deal. I was like, guys, this is so dumb. Why are we investing in a mattress company? And I think it was Keith that actually said, like, just try it.

• 28:12Speaker 02

  Yeah.

• 28:12Speaker 00

  And I slept on it for one night and I was like, let's frigging go. Let's invest in this company. But yeah, I think that's totally true. On the, on the like, being a professional investor side of things, like, you know, I think if you look at different vintages, like 2022, you could argue that actually like the best investors were the investors that stopped investing.

• 28:32Speaker 02

  How do you deal with that? If, if like you've tuned your whole system for like building a track record by making good deals?

• 28:38Speaker 00

  I think there's a couple. One is, because I was actually just looking, so we, we had a fund that, I wasn't here, obviously. But there was a fund that was, that had 2022 included in it. I don't think it's like, it's hard to be excited about much of what happened in 2022. But it's a three-year fund. And then it also has 2023 and 2024 in it. And so one answer to this is you're consistent through vintages. You have some time diversification per fund. And like, you know, you hope that the 2022 also includes the 2023. And so like, you get through some of it that way.

• 29:08Speaker 02

  Yeah, this is, Brian Singerman used to always say that venture is not a macro asset class. It's a micro asset class. As long as you're in the right companies, it doesn't really matter. But like, the, if you just look at the data around the 2022 vintage or the window around that, it's massively underperforming.

• 29:26Speaker 00

  That's right.

• 29:27Speaker 02

  Other vintages. I think there's like some truth to that. And then there's also some risk.

• 29:31Speaker 00

  There is, there is risk to it. But it's also like, unless you're Peter Thiel, I think trying to call the market moment is also very risky. And like, you look at like, let's take like, public market index investors. People who just buy and hold the S and P destroy people who try to like time it almost, almost every time.

• 29:47Speaker 02

  Right, yeah.

• 29:47Speaker 00

  And so I think if you're not one of a small number of investors that, you know, you guys might have on your team, I think it's, you can, you can mess it up in a big way. Because I think there was a lot of people who were like, ah, 2017, this is a bad time. We're at the top, don't invest for the next few years. And then, you know, you miss some good companies or 2023, 2024, you still don't have your FOPAC on the gas. You can miss it. So I guess like my counter to that would just be that like, most people can't call the macro very easily. You can't call the macro very easily and then you miss the good vintages.

• 30:14Speaker 02

  You have to focus on the micro.

• 30:16Speaker 00

  You miss it all.

• 30:16Speaker 02

  If you can't call the macro. There's at least enough data that you should be able to like remember prior cycles, which it doesn't seem like we have the ability to do at all. Memory is so short, like 2022 is not that long.

• 30:32Speaker 02

  And everybody's like, man, we can't do that again. Yeah, maybe if this happens in 20 years, our kids won't remember.

• 30:41Speaker 02

  34 months ago.

• 30:44Speaker 01

  Well, core investing memory of mine was actually an offsite at your house, Trey. And this was peak in 2021. The crazy thing was like, the consensus in the room was that it was, the bubble was about to pop. Like, one, that we were in a bubble, and then two, that it was definitively about to pop. And the conclusion that we came out of that offsite actually was to, Peter wanted us to go to the beach for a year and do a sabbatical, but the conclusion was, let us invest in our very best companies. We made two investments, I won't say them in case that's weird, but we did two investments. And both of them have been actually even vintage adjusted, really, really good. And so I think that like, to the micro versus macro point, like, the winner of 2021 was the worst possible time to make an investment, probably in like the last 15 or 20 years in venture.

• 31:29Speaker 01

  And I think if you still get the micro right, like, maybe you would have made more money if you would have done those investments in the summer of 2022, because you still probably could have done them. They're still really good investments.

• 31:37Speaker 02

  I mean, this is, this is the nature of Peter is that like, no matter how annoyed you are with him, he's always right. On some timeline, he's always right. I can't tell you how many times I've been like, oh, this is so ridiculous. Like, he's getting so emotional about this, this thing that like, I don't understand why he's so charged about it. And then 12 months later, I'll look back and I'll be like, shit.

• 32:01Speaker 01

  Wow.

• 32:02Speaker 02

  Can't believe how well he nailed that.

• 32:04Speaker 01

  But I think it's really dangerous to try to do this if you don't have someone like that.

• 32:07Speaker 02

  Yeah, if you're not Peter.

• 32:08Speaker 01

  And

• 32:09Speaker 02

  I couldn't do that. There's no way I could.

• 32:10Speaker 01

  I think almost nobody can do that.

• 32:11Speaker 02

  Yeah. And I think there's like something really unique about him as well, where he understands that. You it is it is less important to be exactly true than it is to be directionally true because it's really hard to shift the overturn window. And so like, most people are like, they try to like, sort of moderate their approach to something. And they, because of that, they're not directionally pulling hard enough to shift any strategy. Whereas I think Peter is just like, I'm gonna get like, super, I'm gonna dig in my heels on this.

• 32:44Speaker 00

  Just to move the window.

• 32:45Speaker 02

  Just to move the window a little bit. And that tiny adjustment that ends up being made is is really powerful. I come up with this all the time with Andro, with our executive team, where like, you know, everyone wants to be reasonable. And I feel like I'm constantly coming in over the top, being completely unreasonable. And I think it's just like.

• 33:05Speaker 00

  Not actually wanting the outcome that you're saying.

• 33:07Speaker 02

  Right. It's just a learned behavior from Peter. It's like, I'm gonna say something that, even if I don't believe that we should do exactly what I'm saying, I'm just trying to pull people out of their, you know, their, unintentional stasis that they've kind of locked themselves into.

• 33:23Speaker 03

  The quote that I remember from that offsite was basically Peter saying something along the lines of like, I know that you guys are going to want to deploy. Like, there's going to be people on this team that want to make investments right now because like, the category is so hot, everybody thinks everything is best, bubble's about to pop. And so the rule is only like, you know, go figure out what are like the two, three best companies, we'll invest at that, and like, whatever the market clearing price is, and like, bubble will pop. But because we've invested in the truly, you know, sort of best ones and gone hands off on everything else, the best ones will make it out through the other side. And so one of those investments was the $9 billion post, you know, ramp round. Nine months later, the company did a down round at $6 billion, basically in valuation. And so in theory, that like, you know, late 21, early 2 investment like, looked bad. At least now, obviously, at like, a $40 billion valuation. And so even the IRR with the like, you know, down and up, still made sense.

• 34:08Speaker 03

  And so I think it was Peter sort of pushing this, like, you guys are going to deploy, I can't stop you, even if I wanted to like, stop you guys from fully doing it, it's not going to happen. So therefore, at least just do the very best ones, and then stop. And then we did kind of feel good, because it was like, yeah, we made two really big investments, and we're like, okay, like, you know, we can stop now.

• 34:23Speaker 00

  Is there any like, rising discomfort in founders' funds at this current moment that's like 2021? Or is that not the tone?

• 34:30Speaker 02

  I think it's probably different across different people. I am very uncomfortable. I am not enjoying this moment at all. Maybe some other people are.

• 34:39Speaker 00

  Why aren't you enjoying it?

• 34:40Speaker 02

  I feel like we're getting back to this point where the. Prices are untethered from reality and it like reminds me a lot of 2021.

• 34:50Speaker 00

  I mean, you're also, um, you're in, uh, obviously there's AI, but I know you spend a lot of your time in hard tech, which is now probably just as hot as AI, it seems like.

• 34:57Speaker 02

  Totally, yeah. If not hotter in some ways. I feel like there's almost been a bit of a reset, particularly on like vertical AI SaaS, where people are like, oh crap, like the labs are kind of gonna do a bunch of this stuff. Uh, so maybe there's even been a bit of a reset, but there hasn't been any form of a reset on, on hard tech. And, um, I think, you know, Founder's Fund for over a decade has had this sort of Founder's Fund science concept of, you know, we want to fly in cars and instead we got 140 characters. And we've probably been more active than anyone in investing in these hard tech companies. And did they work out? They did not, for the most part. They did not work out.

• 35:33Speaker 00

  Well, but you got, I mean, you got the ones that mattered.

• 35:35Speaker 02

  Yeah, we got, we got the ones that mattered, but if you, if you think about like where the, most of those gains came from, it was actually PayPal Mafia. It wasn't like a thesis that turned into great returns. It was.

• 35:46Speaker 00

  You're not like.

• 35:47Speaker 02

  That turned into.

• 35:48Speaker 00

  Yeah, it's funny, because most people in your position would obviously say, oh, well, our thesis played out. And yeah, we had some losers, but we had Andro and SpaceX. And so it was basically right. But you're saying that like, actually the thesis didn't really serve us and we would have made those investments anyway?

• 36:00Speaker 02

  And I think they were actually hard to make even with the thesis. Uh, you know, where, where not for Luke Nosick, basically like putting his career on the line, I don't know that Founder's Fund would have done the early SpaceX investments. When I pitched the Founder's Fund team on Andro, they were basically like, who's running this company? I guess it's not you and it's not Palmer. So you need to come up with a better solution. So these things weren't even obvious, even when they were direct network. Um, and so I think, I, I think the thesis side of this, like, we're just way more careful around it now than we were historically, where it's like, it's not sufficient to have a really strong technical founder. You, you have to have somebody that's equally good on the

• 36:40Speaker 02

  business side. Otherwise, it, it's just not gonna work. And what we're seeing a lot of today, whether it's like hard tech or defense tech or manufacturing, industrial automation, whatever it is, is that there's a lot of people with great ideas and interesting technology. But. Significantly accelerated rounds for the commercial progress. And the belief, I guess, is that like, well, if the product works, the company will just obviously work. And I don't think that's actually obvious at all, that the company will work.

• 37:13Speaker 03

  I admit, I like, don't mind the current moment as much, but I think a part of it is like, I probably 50, 60% of the investments that I do are these like, you know, sub 30 post rounds. And then it's like, sometimes some hot founder from some XYZ thing spin out comes and says, I have offers at 7500 posts. And I'm like, great, that's just like not the business that I'm in. And like, you're welcome to, you know, sort of go raise that. And so I think I mostly ignore it. And then I feel like the current like, you know, not to speak on behalf of the entire firm, but I feel like the maybe if I were to give the like, what is the closest that we have to like the 2022, you know, sort of take, it's that there are a set of generational companies that we are involved in, you know, OpenAI, Anthropic, SpaceX, Android, et cetera, that are all now at this point largely priced in slash so late stage slash all IPOing soon. And it's like, not very obvious what that next cohort of companies is that could even accept a billion dollars of investment, you

• 37:58Speaker 03

  know, sort of right now. And so I think that's probably the biggest, you know, sort of question is like, we've had a pretty wild deployment rate over the last three, four years in terms of especially, you know, some of our growth checks, maybe not as possible over the next three or four years if there, you know, aren't logos like that.

• 38:12Speaker 02

  We're sort of with Delia making these investments at under a $30 million valuation. He has to spend a lot of time at preschools, finding, finding young founders who are willing to accept such low valuations for their, for their seed round.

• 38:25Speaker 00

  Is that why you're not allowed within 50 yard radius of school?

• 38:28Speaker 02

  I was wondering why that was the case.

• 38:30Speaker 03

  Yeah, yeah.

• 38:31Speaker 00

  Well, this is a part of your PR team.

• 38:33Speaker 03

  Yeah, exactly.

• 38:35Speaker 00

  It's a little bit on the line for me.

• 38:37Speaker 03

  It's not even close to the line.

• 38:38Speaker 02

  The idea of like a $30 million seed round valuation is like, oh, wow, that's, that's reasonable.

• 38:45Speaker 00

  It's reasonable.

• 38:46Speaker 02

  It's like three X what reasonable would have been 10 years ago.

• 38:49Speaker 00

  It was so long, it was so recent that it was unreasonable. Like it's five years ago, people were like, whoa, what these Y C companies think they're raising at 25? Like, who do they think they are?

• 38:57Speaker 03

  Like, I did have a six mil post seed round, like, you know, two months ago.

• 38:59Speaker 00

  Six posts?

• 39:00Speaker 03

  Yeah, six posts. Yeah.

• 39:01Speaker 02

  I think the thing that the founders are missing in this, this equation is that like the economics at these different prices at the early stages shifts significantly. And so like, there's so much money in venture, there are all these new funds that are setting up. It's like way too aspirational. There's way too much money in the system.

• 39:20Speaker 00

  Well, they forget them new funds. It's really just the mega platforms are consolidating $40 billion or whatever.

• 39:25Speaker 02

  Yeah, even that.

• 39:26Speaker 00

  Yeah.

• 39:28Speaker 02

  Because those terms are shifting, it's like the deals that you could do 10, 15 years ago that led to these.

• 39:35Speaker 00

  They're gone.

• 39:36Speaker 02

  They're gone.

• 39:36Speaker 00

  They're totally.

• 39:37Speaker 02

  They're gone. And so like, then the question is like, can you actually over a venture cycle, like a venture fund cycle, can you actually beat the S and P 500 with the new, this new unit economic, even if you're hitting the monopoly players? I don't know. It seems like it's way harder than it has been.

• 39:51Speaker 00

  I think it's way harder than it has been. I mean, I think it seems like you'd expect across the industry multiples to compress, but the power law is still super strong, obviously.

• 39:58Speaker 01

  One thing we've noticed is like in our latest venture fund that we kicked off maybe like six or seven months ago, the like average entry price right now, I think is something like 700 million in valuation. And if you compare it to the prior five, those would probably be on average, because we do some mid-stage rounds in there, but it would probably be like 80 to 100 million, you know, and like, you know, entry point to average price. Probably speaks to the fact that like even seed rounds that we're doing are so high that then when you, you know, add in some of the mid-stage things that are also high.

• 40:23Speaker 00

  We don't talk about this much. What's your current comfort with the temperature and venture and funding and everything like that?

• 40:28Speaker 01

  Yeah, I'm also deeply, deeply uncomfortable. I think the, the similarity is 2021 that I draw is that in 2021, there was this just like unanimous sense because 2021, people were like investors were making a lot of money. Like there was a lot of things that were IPO-ing. Everyone was getting like a great cohort in 2020, 2019, 2020 and 2021 of really big IPOs that gave everyone kind of like a big taste of liquidity at the same time that everyone was getting markups very, very quickly and very, very like high markups very rapidly. And there just started to become this sense where you'd have a company that would be at say like a hundred of ARR and it would get priced at $10 billion. So you'd have this like 100x multiple on it. And the investor would be like, well, but like obviously

• 41:10Speaker 01

  it's going to go like 100 to 300, then 300 to 700, and then 700 to 1.4, and that's going to be worth 30 billion. And I'll make a 3x in, you know, four years or whatever. It was just like this sense of inevitability without really digging deep into like, one, just the immense difficulty and the base rates of how many companies that are at 100 of ARR that ever make it to 1.4. Billion of ARR in that arbitrary example, but there was a lot of situations that looked like that where everyone was like, well, of course, like it's here and like the trend's good. So it's going to be there. And it's like, well, wow, like if it does get there, it's a three X from where you're investing in. And two, like in history, the amount of people that have gone from here, there's 5% of all companies. And so you're like over underwriting relative to historical norms by 20x.

• 41:54Speaker 02

  Not to mention all the dilution along the way.

• 41:55Speaker 01

  And you're not incorporating dilution in that equation. And so you only have these situations when people are, you know, making a lot of money. And like I also, I think this is like, this duality is the key to a bubble where like it will also like these last three years, unquestionably is going to be the period where venture capitalists have made the most amount of money in history. Andorol, SpaceX, OpenAI, and Anthropic, they're going to produce the most amount of returns that we've ever seen, probably by two orders of magnitude of any batch of companies. But then when you strip out those four companies or five or six companies, then like you start, one, playing with house money and two, you start assuming that everything's going to like be daysies and roses because of the, the success that has been baked in other parts of the market. And so it's just that, that feeling,

• 42:38Speaker 01

  like I'm feeling investors have that feeling of inevitability where it's like, yeah, I'm going to invest at $5 billion, but it's going to be 15 billion in two years. And then we're going to IPO or we're going to sell it at that price. And it's like, oh, it's just, we've forgotten how hard, how brutally hard it is to go from one to zero.

• 42:53Speaker 02

  Even if you go down from the 100 million ARR line, one of the things that I've noticed in my 12 years doing this is that there's this weird glass ceiling between 20 and 30 million, where like a reasonably managed enterprise SaaS company is going to get to 20 or 30 million. And yeah, but then like getting through that glass ceiling is super freaking hard.

• 43:16Speaker 01

  Yeah. Like the percent that make it from 20 to 100 is a miss. Huge drop off.

• 43:19Speaker 02

  Huge drop off. And so I think that early on in my time in venture, I would meet with these companies that are like, yeah, in three years, they've gone from zero to 15 million in ARR. And it's like, oh, that's really good. That's a really good trajectory. We should like dig in. And now I'm just like, I don't know. I mean.

• 43:33Speaker 01

  Well, it's tough because the way VCs are underwriting is forcing founders at one to five million of ARR to tell a story that we're going two to 30 to 100.

• 43:42Speaker 00

  And like you see that all the time. It's and then it forces people to build companies in weird way like it's all kind of distorting.

• 43:49Speaker 01

  I think what's different about this cycle relative to 21 is that in 2021, you still had not even the best companies. Were able to beat the original like Google early years of revenue growth. And then Anthropic in this cycle is literally the first company that since Google has actually like shown an even steeper basically you know sort of curve. And then I think that feeds into the both of like, hey, you're playing with like house money. There's so much liquidity coming. But then also assuming that like anybody else will be able to now match that same, you know, sort of revenue trajectory. And there's things like, you know, even in our portfolio cognition is obviously sound like a sort of wild, you know, growth rate. And then I think it just goes down the stack where people assume even the seed stage one millionaire thing is going to be able to follow that same.

• 44:24Speaker 00

  But it goes up a lot of businesses that could raise at, you know, a quarter of the valuation that they're raising up. But because the market's where it is, it's like, well, I rather than just saying, I'm going to go from one to four to 11, whatever. Which, you know, there is a way to venture finance that business. It just looks different.

• 44:40Speaker 02

  How do you guys respond to the like, the pitch at a seed or a series A or series B, kind of where you're focusing? Where the founder is super confident that they're going to go from one to 10 to 100 to 500 over the course of like three years.

• 44:56Speaker 00

  The running joke is that it doesn't matter what market you're in or what company you're running. The running joke we've had is that the end of your plan for any company under five million of ARR this year is 30.

• 45:05Speaker 01

  It's always 30.

• 45:06Speaker 00

  It's always 30. It's just like you see a deck and it's like, we're at four. It's like, are you going to go to 30? And they're like, yeah, how'd you know?

• 45:13Speaker 00

  It's crazy. We had like, yeah, nine of them in a row.

• 45:15Speaker 01

  There's like a little bit of like, don't hate the player, hate the game in there as well. Where it's like, you know, you have like Hamat on a podcast being like, if my partners bring me something that's growing 3X. I tell them, don't bring it to me. Like the new, the new bar is 10X. That's not nothing against Hamat. That's like sort of where the market is. It's obviously investors are, it's a game of opportunity costs, not absolutes. Like you're trying to do the best thing in any given year, not something that just meets some bar. And so there's some, some of that where it's like, well, you know, part of being a good founder is being able to raise capital and like playing the capital raise game. Well, but I think you do have to mix that with like, um, like a, like a larger. Amount of you have to be genuine as well and you have to ideally have like worked out the idea maze

• 45:58Speaker 01

  in order to like show a path to actually doing that like it can't all be bluster.

• 46:01Speaker 00

  Yeah, and I think also like we're, you know, our model is that we're gonna work closely with them for a long time for, you know, that's just what it is. And so I think, you know, it'd be very frustrating for us to work with somebody who's like, my plan is 10 to 100, but I've got no plan beyond how I'm going to manage that. And I don't know what team I need to hire. I haven't thought about what team I need to hire. I haven't thought about what that product surface here looks like. I haven't thought about it. If you're gonna sort of take the role of I'm gonna work with this person and then they're gonna say that in order for that to be an enjoyable plan as you work with them on it, you'd wanna, you wanna believe that they're gonna think about, okay, like, I know actually what's gonna go into it and it's gonna be really hard.

• 46:35Speaker 02

  This is sort of Peter's quad chart from zero to one around indefinite optimism versus definite optimism. If you're gonna be optimistic, you should at least have a plan.

• 46:44Speaker 00

  It's too frustrating otherwise.

• 46:45Speaker 01

  Yeah, I feel like you would probably be more allergic to any version of of that tray. I just remember a, you know, there was like some company we were meeting back in the day and they're like, I'll be coming from a dinner with Mark Andreessen and you just like email back, you're like, don't do that. You're like, that's, that's not a game that we should be playing.

• 47:03Speaker 02

  Oh, the competitive game of like, look at me, I'm peacocking all of my connections.

• 47:08Speaker 01

  Yeah, it's like, well, like, oh, you guys better move quick because like afterwards I have like a dinner with with this famous person. And you're like, this is just founder to founder feedback. Don't do that.

• 47:19Speaker 02

  I don't remember doing that, but it sounds like something I would say. The thing that I feel is so triggering to me about these like crazy plans is is not the like optimism and like I believe that they should have the ambition. It's the like willful like like removal from all historical examples.

• 47:42Speaker 01

  And it's an easy time to be like, things are different now. The rules are changed. You know, you can have billion dollar companies with four person teams and like you can kind of, I think, convince yourself that just because the rules have changed, that there's no rules at all anymore.

• 47:55Speaker 02

  Well, you can kind of do that with software, but with hardware, it's like you have to like make real things and like this idea that you can like. Like 100x production in a 12 month period. It's just like, I, I'm, I'm sorry. You, you literally can't. I'm just gonna say that like.

• 48:10Speaker 00

  Okay. Can we talk about, I want to go to a hardware topic. Before we all sat down, we were talking about chips and I've spent some time with some like public market investors recently. But you know, everybody knows that like people love semis right now. People don't like software. They like semis. We obviously have like, you know, huge compute shortages. We have the situation with, you know, Taiwan and China. We've got America sort of like without its own real ability to, you know, fabricate anything. There's a lot of startups working in chips and semis in various ways, but I would just be curious to like, hear your sort of like lay of the land of the situation. Like where we are kind of like as like a tech industry, you know, maybe then we can get into like, you know, country positioning and sort of some of the broader things.

• 48:53Speaker 00

  Maybe that connects to Android or whatever, but maybe just starting with chips as a point in time, like what's the lay of the land? What are people, you know, excited about? Like, what are we missing?

• 49:01Speaker 02

  I think the, the biggest challenge is just around fabrication. It's like, there's a lot of energy going into chip design. You know, making more efficient AI chips or making more leading edge chips or, you know, whatever it is for memory or for inference. Like there's all of these different things that people are working on and that's great. I'm glad that we're doing that. But at the end of the day, like these ships are all coming from the same place, like they're being made. And for decades, the United States was the really only player in semiconductor manufacturing. That was actually where Silicon Valley came from and we've completely lost our way with this. Almost entirely happens outside of the United States. To the extent that we were doing anything in the United States over the last, you know, couple of decades.

• 49:45Speaker 02

  It's not leading edge anymore. It's, you know, some of the more mass scale like automotive chip fab and things like that. Or low scale kind of research and development fabs. And we haven't really figured out how to reassure the leading edge fabrication. And obviously like this is what the CHIPS Act was intended to do. It doesn't seem like there's a whole lot of traction coming out of the money. That was spent there. The government has made this big bet on Intel, taking an equity position in the company to try to get them to the point where they can be not only a manufacturer of their own chips, but also as a merchant supplier of chips to to other people. Their

• 50:28Speaker 02

  yield rates are still really low. Obviously, Libu is doing everything he can to level that up and has the TeraFab project that he's working on with Elon now as well. So it's sort of our best bet, but not at all certain that it's going to work. The other companies that have leading edge processes like TSMC and Samsung have been like getting attention from the government to try to get them to build domestic fabs in the United States. But the incentive structure for those is totally wrecked. We're like, it's not clear why they would build any of these fabs. It's not clear that the talent even exists to do it domestically. Anyway, so I feel like our focus has just been sort of wrong. It's been on the ease. I will say this, and I actually mean

• 51:09Speaker 02

  it. We're focusing on the easy part, design, which I'm not saying is easy on an absolute basis. I'm saying on a relative basis, we're focusing on the easy part, and there's a lot of money to be made there. But if we don't fix the hard part, none of this is actually going to work.

• 51:25Speaker 03

  There's not even like an optimistic plan right now. Like, I think if you were to just look at all the chess pieces today and how they're playing for the next five years, there's nothing that would indicate it would be any different five years from now. Like, at least when you had like, in 2015, we lost, you know, sort of access to space because we shut down Space Shuttle. And like, we were dependent on like, you know, the Soyuz for taking people up to space. At least you could like, be like, at least Elon is trying. Like, there's a like path to something where those will be brought back. 2020, we have it. If you were to like, analyze what everyone is doing today and say in 2030, you know, whatever one, is there going to be leading edge fabs in the United States at scale? It's like, no, there's not even like anything that anybody's working on that would lead towards that today.

• 51:59Speaker 01

  Over the next decade, and if you haven't thought about this, no need to give an answer, but over the next decade, what do you think the probability is that Taiwan is quarantined or otherwise?

• 52:08Speaker 02

  I think it's high probability that it's not what it is today.

• 52:11Speaker 01

  Yeah.

• 52:11Speaker 02

  If that's like a Hong Kong like situation, or if it's some sort of, you know, the United States reaching a détente where we continue to have access to critical Supply chain and we've given up something in that arrangement or like a full scale invasion, where you know, we have to make a really hard decision about whether or not we want to actively support Taiwan. One of those outcomes is wildly probable, 90 plus percent in the next 10 years.

• 52:42Speaker 00

  I feel like your views must be something along the lines of like, we need to be able to, we need US chip fabs, right?

• 52:48Speaker 02

  We both need to like, create a credible deterrent threat for a full scale invasion of Taiwan. And that's the andro side of the problem that we're focusing on, which has led to our co-founders being sanctioned in China. So that's that. And then on the other side of it, it's like, yeah, we need to figure out some way to reshore the manufacturing credibly.

• 53:10Speaker 00

  Is it basically impossible to start a new company? Like, is there anybody, are there any entrepreneurs with any amount of capital that could just start a net new chip fab? Or is that just, is it too big of a problem?

• 53:23Speaker 02

  I wrote this article about choosing good quests and I made some joke about how like, celebrities monetize their brand by, you know, selling consumer goods like tequila or popcorn or whatever it is. Just it's a commodity. They just slap their brand on it and they make a bunch of money. Good for them. Our version of this in Silicon Valley is like, starting a venture fund. It's like all these people that have the ability to raise gobs of cash and do really hard things. They, you know, sit on the roof like Big Head from HBO's Silicon Valley and raise a venture fund and, you know, pill around with AI. And we really need them to be founders.

• 54:04Speaker 02

  We need them to be heroes. It's a big ask, but like, I'm shocked that no one has taken it more seriously because it feels like the most important thing that people could work on.

• 54:14Speaker 00

  Like, what does it take? Is this like Elon plus $100 billion? Like, what actually is required?

• 54:22Speaker 00

  For this problem, for somebody to net new start one.

• 54:24Speaker 02

  I think it's Elon plus tens of billions of dollars. I don't know that it will require hundreds of billions, but definitely in the mid tens to do it. I mean, there's all sorts of levers that you have to pull. Like you would have to get the US government involved in pulling you to the front of the line with ASML to get the EV. You would have to like figure out the supply chain stuff. You would have to build out the process, which is literally like thousands of tiny steps that you have to get high yield rates on so that you don't fail out as you, as you make them, which is a talent problem. We don't have enough skilled labor that understands how that works. It's really hard because it's sort of death by a thousand cuts and it will require someone

• 55:09Speaker 02

  that has the ability to manage that complex process as a leader.

• 55:13Speaker 00

  Yeah.

• 55:14Speaker 02

  As I said, I'm not a good manager, so I'm not sure I'm the right person to do it, but.

• 55:19Speaker 00

  Dylan can help.

• 55:22Speaker 03

  I didn't get far a little further along before I signed up for another one.

• 55:25Speaker 02

  But, you know, I think that like there are ways that we can shortcut some of this system. We've invested in a company called substrate that's building a new form of lithography that simplifies the process for the rest of the steps that are involved.

• 55:42Speaker 02

  And it's like, it's really important that things like that get pushed down the road so that we can, we can actually pull this off. But this is like civilisationally important. It's not, it's not just a technology problem. It's a geopolitical problem.

• 55:53Speaker 00

  Well, I was gonna say this before. I feel like this, like the, the China Taiwan thing on some level feels like we're all like willfully kind of looking the other way about it. And it's just like, if we're to believe what you said, that it is wildly probable and it's a big problem and we have no plan and we're all just like, that's all right. Just keep doing shit like.

• 56:11Speaker 02

  Well, yeah, every, every time I meet with one of these chip design companies, I think of them as like pinch runners, you know, they're like, all right, check this out. I'm like really good at stealing second base. And I'm like, yeah, but how did you, how did you get on first base? Like who hit the ball? It's like, ah. Just like really focused on that pinch running like I'm the greatest base runner in history, not really, don't really know how to solve the problem of getting the bat on ball. And I feel like that's what we're doing over and over again with semiconductors. It's like we've solved with hundreds of pinch runners and we have nobody that can actually make contact.

• 56:46Speaker 03

  Trump also visited China for the first time basically like a decade this past week. And like Xi Jinping was extraordinarily clear in all of the communications of like, our number one problem and issue is Taiwan, references the Thucydia trap and says like, you know, we're clearly the rising power, you're the decaying hegemony. The only way to avoid kinetic war is like, you need to accommodate our needs and our number one need that we've made very clear throughout this entire week is that like Taiwan reunification is something that we deeply, deeply care about. If we end up letting that happen, it's just like a huge betrayal of all American values where we're the world police and you're letting them, you know, sort of westernized democracy get taken over by an adversary.

• 57:19Speaker 02

  And I think you have to take Xi seriously.

• 57:20Speaker 03

  Yeah.

• 57:21Speaker 02

  Like, you know, when he says that, that's, he's saying, I am staking my reputation as an authoritarian on my ability to execute on my plan. He is held accountable by his populace for following through on the things that he said he's going to follow through on. I think no one in the West takes that seriously because in our mind, it's like, that's a four year cycle. Like politicians come and go.

• 57:44Speaker 03

  They say stuff.

• 57:45Speaker 02

  They say stuff and they very rarely follow through on it. And so we have this tendency to just like not take it seriously. But it's like, he, he, he has to follow through. There's like, there's no other way for him to stay in power.

• 57:56Speaker 03

  We need some fabs.

• 57:57Speaker 02

  We need some fabs.

• 57:58Speaker 03

  Also in hardware, the node said this on the podcast that like, you know, robotics will probably be the biggest thing of all time. Obviously Elon's, you know, thinking about this a lot with Tesla. Have you spent a bunch of time meeting with robotics companies? It seems like robotics would be something that would be square and sort of your guys' interests. Are you guys looking at it a lot?

• 58:16Speaker 02

  All the time. Seems like it should work, right? Like, why wouldn't it work on some timeline?

• 58:21Speaker 03

  Yeah, I think we haven't like yet made any like huge either like, let's say like humanoid or like generalist model, you know, sort of investment yet. But like, we do have a whole set of portfolio companies that either like use robotics a lot, like Andrew has plenty of robots, you know, in, you know, Foundry. You know, Hadron, one of our portfolio companies, uses robotics all the time. We've made some like vertical specific, you know, sort of robotics plays. I think we're a little more bearish on the like, you know, humanoid as like a venture, you know, sort of category. We are comparing it to Unitree in China and thinking like, you know, is there even an American ecosystem that can like support something like this? I think, you know, the hope that at least I personally have is that like, you know, humanoid robots play out somewhat similar to, you know, sort of phones where it's, you know, Chinese hardware, but American software. And that forces this like, you know, forced détente that neither side is happy with.

• 59:05Speaker 03

  Like China would much prefer that it was Chinese software running everywhere. America would much prefer that iPhones are made in America.

• 59:10Speaker 02

  Did you like Jensen Huang's point on the Dorkesh podcast about like?

• 59:14Speaker 03

  He's got to win.

• 59:15Speaker 02

  America should go win every market, including the Chinese market.

• 59:18Speaker 03

  I think my view is somewhere in between that like, I don't think we should be like helping them, but I do think that some of the chips sanctions actually heavily incentivize them to set up their own, you know, sort of fab ecosystem. And so I think that like, sometimes winning the Chinese market is a way to weaken them. And so I agree with him in like that narrow point, but I do think it requires like looking at that on like a market by market basis. I don't maybe agree with the like, American venture capital should be like funding Chinese companies because that feels like you're just strictly helping the Chinese ecosystem versus Yensen selling chips to China feels like you're sort of just, you know, giving them the opioid addiction, but like, you know, in the form of chips and it's probably good for them to be, you know, addicted to us.

• 59:53Speaker 02

  Provided that there actually is such a thing as a US company owning a market in China. This is not how it works. I mean, I think that's probably the thesis that Tesla had as well before they realized that BYD was just going to copy all their best stuff and cut the price. And I think that's the much more likely outcome. It's like the super naive ramblings of a monopoly hungry American who ignores geopolitical reality. It's like, well, obviously the right thing to do is just to do business with them because they're mercantilist and like, this is just going to work, obviously, until your IP is gone and they've taken the, the market that you thought existed for you and they've exported it to the rest of the world at a much lower cost.

• 1:00:35Speaker 01

  I have a hypothetical for mostly for Dalian. So the, if there is Chinese citizens that aren't, you know, CCP members that deeply want to come to America or come to A Western country and build Western AI, build AI that enriches the Western world away from China that they might not want to be citizens of anymore, or want to leave, or not want to build for that ecosystem. Do we have a responsibility, or even should we invest in those very hypothetical companies? Or should we stay away from from those teams that that actually deeply want to contribute to and advance Western AI, but because of where they were born, have to go through different means to do so?

• 1:01:18Speaker 03

  I think if somebody is working on national security technologies, which are arguably like leading edge AI effectively is, you know, I don't think it's like an unreasonable argument to make that you should have to roughly abide by the regulations around that, which is ITAR compliance. At Varda, at Androl, we would not be allowed to, you know, hire someone like that. If they renounce their Chinese citizenship, if they fully became an American citizen, if there's also strong confidence that the CCP doesn't have some of their like family members, you know, under gunpoint and can, you know, leverage that fact to get them to do things on behalf of China and America, sure. But I think that's just really, really difficult about like if it's just an individual citizen that has made it over, China still controls their life. Even if they like hate China, they don't want, you know, sort of that to be the case. If they've got their grandma by a gunpoint and they convince that, you know, sort of

• 1:02:02Speaker 03

  person to be a sort of fly back to China and then detain them, doesn't matter where that person's personal beliefs are. What matters is like the system that you're interacting with.

• 1:02:08Speaker 02

  The alternate version of this is suicidal empathy. It's like, look, none of us want to believe that every multi-billion Chinese people in the world are bad. Like, no, I don't believe that. I don't think it's crazy to believe that there's like some some racist tendency in having a concern around this. But like, there are people in our society who have that level of suicidal empathy, where they're like, well, obviously you can't say anything negative about the obvious logical like fall through of of doing the, you know, investing in Chinese nationals with family ties back in the country and stuff.

• 1:02:51Speaker 01

  Do you think that there's a like a de-escalation path between, you know?

• 1:02:56Speaker 00

  America and China, like, you know, it's kind of implied in a lot of this conversation is that it's just like, we're going to a tense or intense place over time. Is that just like what happens when you have a rising power and you just have to plan for that to be the case? Or do you think there's like any de-escalation path?

• 1:03:13Speaker 02

  I'm certainly hopeful that there's a de-escalation path, that there's diplomatic solutions and, you know, hard power deterrence that will prevent us from going into war with one another. I think that's like the worst possible outcome.

• 1:03:25Speaker 00

  For sure.

• 1:03:26Speaker 02

  We, I don't think the American people have any memory of what it's like to go into great power conflict. Like in the scale of destruction that would result from doing that.

• 1:03:35Speaker 00

  Last one, I think it would just be a lot worse.

• 1:03:37Speaker 02

  It would be devastating. We can't afford to do that. And so I think part of it is like, we have to hope that China has that same belief that it's unthinkable and that we should do everything we can to stay out of it. But they've also spent, you know, the last 50 years with a very intentional strategy to box the West out of the, the whole supply chain to make their success inevitable. If you've read the book Hundred Year Marathon, it kind of talks about this in the, the terms of like Chinese fables, where there's this, this story that gets cited a lot in Chinese fairy tales, essentially that's hide your strength, buy time.

• 1:04:18Speaker 02

  And it's this idea that like in Western, in, in Western literature, we have this sort of tradition of chest thumping. We're like, it, it's all about, you know, showing strength. And we expect that other people will do the same because we're like, show us your, show us what you can do and we'll show you what we can do. And then we'll like decide how that gets litigated. Whereas like the Chinese strategy is always cower, like, oh no, we're so weak. We don't, we don't have any power, like our GDP is so low. And they're just going to keep repeating these messages until the moment where the flip is inevitable. And then we're going to look back and be like, wait, we have no leverage, like we have no leverage.

• 1:05:00Speaker 02

  The Belt and Road just completely eviscerated our whole ability to control the supply chain. We don't own any of the, like any of the ships that are required for global trade. We don't have any military advantages because we haven't invested in it. We have no access to semiconductor manufacturing. And then they're standing there with the entire deck of cars in their hands. And where does that leave us? And I think this is kind of like the fallacy about the moralism or the moralizing around this, where it's like, look at all these things that the US government could do with technology. We're so concerned about how this technology is going to be abused for all of these unethical use cases. And it's like, guys, if you're concerned about a Western democracy, imagine a world in which we have no sense in how

• 1:05:44Speaker 02

  these technologies are governed. And we're walking ourselves willingly into this situation where you think it's bad now, wait until you see what's on the other side of a dominant China. Because it's not going to look like the effective altruist version that people believe that it's going to look like. It's just like, complete banana pants.

• 1:06:05Speaker 00

  Yeah.

• 1:06:05Speaker 03

  The like chest thumping versus, you know, sort of being quiet, I think was like exemplified the day that we basically, you know, started striking Iran, where you had Trump, obviously, everywhere, you know, thumping your sort of chest effectively. On that day in the China Post, there wasn't basically a single mention, like in any of the headlines about anything that was happening in Iran. For them, it was just like, this is not, you know, a thing that we even like, you know, pay attention to, categorize, have no opinions on. Xi Jinping effectively just said that, like, I forget his exact quote that day, but it was something like, that's America's issue, America's, you know, sort of challenge that they've like, you know, sort of chosen to step into. Whereas I think, if you imagine the equivalent of that versus like in the Cold War with the Soviet Union, all of the headlines within the Soviet Union would have been about like, here's what America's doing, here's what we're doing to counter it. It was all this like, soft power through proxy wars, et cetera. China's just not, even though like, a lot of their oil comes from Iran, they're

• 1:06:50Speaker 03

  like, effectively just not engaging on this, like, you know, sort of proxy war. And it's the difference between being against a great power that is another chest thumper versus the Chinese approach.

• 1:06:57Speaker 00

  Yeah, fascinating. And you guys have to go in a minute. So I want to end with a couple light topics, just to...

• 1:07:03Speaker 00

  One is, our boy Sam Blonde, he worked with you guys at Founders Fund, and then you guys led a prior round, we did a recent one. I'm actually curious, you know, obviously, we're both really excited about the company, but like, what was, what was your experience with him like, as, you know, a teammate? Did that like, inform, like, why you're like, I want to back him? What was the, you know, what was the experience there for you guys?

• 1:07:24Speaker 03

  I worked with him a lot in the Miami office where he was sort of based and it was incredibly clear that he is just a phenomenal salesperson. Like he is somebody that like knows how to close a deal, wine and dine, et cetera. I think unfortunately, as we've talked about over the course of this podcast, the venture job is not really necessarily a sales job. Once you've yes, you know, come to a conclusion you want to invest, there's for sure a little bit of sales that happens in terms of like, you know, convincing somebody to take your capital. But the vast majority of it is a like, don't try and close every 10,000th investment that is out there in the world. You need to like, you know, discern which is like the one to five that like, you know, sort of matter a lot. And so I think that was partially why he even came to the conclusion after like a year at Founder's Fund, he was like, this is not the world for me. I'm glad that I learned it very quickly. I'm going to go do the world that is

• 1:08:07Speaker 03

  for me. And like, part of why we love Monaco is it literally just feels like Sam embodied in a company.

• 1:08:12Speaker 00

  It really does.

• 1:08:12Speaker 03

  Like, it's just like, I've never seen it so clearly in a company where it's just like, you, people talk about, oh, the founder personality shows up, Palmer personality.

• 1:08:19Speaker 00

  But this is, yeah, it's like usually like the founder, it's like you can kind of smell the founder everywhere in a company. This is, this is, it is, Monaco is Sam, Sam is Monaco. Yeah, totally. I think you guys just closed a big new fund and, you know, we talked a lot about sort of, you know, discomfort and, but then there's obviously a lot that we're excited about and everything like that. And then I realized some of it's for early, some of it's for growth. But like, as you guys think ahead and we're not, you know, this is not, you know, Peter in 2022 or whatever, saying, everybody take a break. Like, I expect you guys are planning to deploy it. Is this going to the same type of stuff you've been doing recently? Or are you like, this cycle has actually played out? We need to find the next trillion dollar companies that we're not currently in? Like, what's, what's the headspace right now?

• 1:08:59Speaker 02

  We have a separation between funds. We have the venture fund on one side and growth on the other. The venture fund, actually, we raised years ago.

• 1:09:10Speaker 03

  Twenty one, twenty twenty one.

• 1:09:11Speaker 00

  And you're still deploying out the same fund?

• 1:09:12Speaker 02

  Well, what we did is we realized that we raised it, it was too big. And that, again, the economics of these things are really tricky. And so we ended up splitting the fund in half. And then we just backed them chronologically up against each other. So we're currently investing out of the second of those two funds that we created. And then growth is focused almost entirely on companies in the portfolio already that are seeing continued growth. I think it's only about 20% of the fund is net new.

• 1:09:42Speaker 03

  Eighty percent is doubling down.

• 1:09:43Speaker 00

  Was OpenAI already in the venture fund at one point? No, that was a that was first.

• 1:09:47Speaker 01

  Originated growth.

• 1:09:48Speaker 00

  Yeah.

• 1:09:49Speaker 03

  But that's probably one of the very few, basically like OpenAI, Anthropic, both originated from growth and we've doubled down through growth. Almost every other meaningful position or check across the fund. And sometimes it's in like a totally different category, like Crusoe is probably one of my like favorite examples of this of like, you know, originally started off as like a, you know, Bitcoin miner and now obviously turned into like data center as a producer. But yeah, we've doubled down throughout.

• 1:10:12Speaker 01

  It's funny, we were actually, I was talking about this, I think, I think with, with the partners here, talking about the, the founders fund growth strategy and how this doubled down within the own portfolio as like 80% of the portfolio, I think can only work at a place like founders fund because it's maybe the only firm that's invested in the companies that have compounded at like a 30 plus percent rate per year.

• 1:10:35Speaker 00

  It only works when you have SpaceX and Androl.

• 1:10:36Speaker 01

  For like 30 years. So it's like, oh, it's like, okay, well, you have SpaceX, you have Stripe, you have Androl, you're like, there's probably three or four more that I'm forgetting, you like Palantir, Ramp.

• 1:10:44Speaker 00

  Yeah.

• 1:10:45Speaker 01

  It's like, oh, it's like, it was just as good of an incremental IRR at 30 billion as it was at like, you know, 500 million 10 years later. And it's like, only if you're collecting those and like burning those types of companies early.

• 1:10:56Speaker 00

  It's hard because you have to be so rational to say, we're not going to just invest in our three best companies.

• 1:11:00Speaker 01

  Yes, like it has to meet like an absolute bar, not just a bar within your own portfolio. And the Venn diagram of those also just happening to be the best investments at growth.

• 1:11:08Speaker 03

  But then the advantage of being involved in the early stage is like the fact that like Androl, Incubation, Ramp, Seed, Stripe, like Series A.

• 1:11:14Speaker 00

  Palantir Incubation.

• 1:11:15Speaker 03

  Palantir Incubation, it's like, it's not to say that we have like, you know, perfect access or perfect pricing, but like, we almost always are able to invest the amount that we want to. And so if you just look at the like, size and we're able to get into these companies also is part of what makes the growth.

• 1:11:25Speaker 00

  It's gotta be a little hard to like match the time allocation to the dollar allocation though, because it's like, how much time do you need to spend on deciding on these companies that you already work on? And then it's like, you're going to meet a lot of these new, net new companies, but you're going to only, you know, deploy 20% of the fund. So it just has to be the case that a bunch of time is going into net new stuff and you just do very little of it.

• 1:11:44Speaker 03

  Why do a net new defense tech thing? We can just deploy another billion dollars in Androl.

• 1:11:47Speaker 00

  Yeah.

• 1:11:47Speaker 03

  It's like, just doesn't make sense to do that.

• 1:11:49Speaker 01

  Yeah. Thank you guys for doing this. This is super fun.

• 1:11:51Speaker 00

  Thank you.

• 1:11:52Speaker 03

  Thanks for having us.