All-In with Chamath, Jason, Sacks & Friedberg - E26: State of Venture Capital, plus fan questions on longevity, decentralization & quantum computing

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Sachs, is there something you object to here?

The poker one and net worth?

No, I mean, it’s fine.

I don’t give a shit about longevity or quantum computing.

But here’s the good news, David.

It’s not all about you.

There’s four people.

You could have two people who like the topic

and then you could just ask them a probing.

It’s fine. It’s fine.

Just just tell me when it’s over.

I’ll do you know.

He’s right.

Do you know what your winners ride?

Rain Man, David Sachs.

And it’s said we open source it to the fans

and they’ve just gone crazy with it.

Love you.

That’s nice.

Queen of Kinwa.

Hey, everybody.

Hey, everybody.

Welcome to the all in podcast.

I’m Jason Calacanis.

And with us today again,

the queen of Kinwa, David Friedberg, sans his dog

in the background.

Sorry for those of you who love his dog.

He’s on a walk.

He’ll be back in like 10 minutes.

Be back and he’ll be in the seat.

And the rain man himself, David Sachs,

ultra focused on SAS and marketplace startups

and involved in some illegal trafficking of red pills

straight up from Honduras to Cuba and then through Miami,

making the red pills, making their way to California.

And finally, daddy’s back.

The SPAC master himself.

Bestie, see the dictator

replenished, bank account replenished,

he’ll be rebillionized by firing on all cylinders.

Oh, it’s so so, you know, live by the SPAC, die by the SPAC.

That’s what they always say in this business.

But you know what?

We have been absolutely inundated with I kid you not

hundreds of questions from you, our loyal audience.

And when this thing is over, we are going on world tour.

We’ll see you in Vegas.

We’ll see you in at the Royal Albert Hall in London and Miami.

All cities are on the agenda.

Let’s take our first question from you, the audience.

To what extent are you guys?

By the way, how’s everyone doing?

I don’t read into the questions, but I mean, look at this guy.

He got his ass kicked in his back.

I’m doing really, really great.

What about the rest of you guys?

You guys play poker this week?

Oh, we played poker.

It was a bloodbath.

Well, although, you know, it’s so funny because like we played

I played a very big game the week before.

And then we step into our game, which is like, I think, still quite big.

But I could not rub two cards together to make a hand.

And I I went off like a rocket ship.

I just lost it somewhere along the way.

And just despite that, despite that, every time I

Chamath and I were heads up at hand, he just smashed absolutely smashed me.

And then I was like, you know what?

I’m not going to be bullied anymore.

And then I stand up to him and he’s got the nuts each time.

I was down. I did.

Jake, I did run you over.

I mean, the number of just complete bluff I ran on you.

Oh, that’s crazy.

And I’m just like, oh, he’s totally got my number to bluff after bluff.

After I was after bluff.

And then I showed him the nuts five times in a row.

It was beautiful.

So I’m stuck a model.

Why? And I come back and I win a used Prius.

I’m just leaving it at that.

I lost a midsize home in Phoenix, Arizona.

I think you lost a Bentley.

OK, don’t cancel us.

Please, Saksak, did you play?

I wasn’t there in that game, but I played in a L.A.

game a couple of nights ago.

And any celebrities?

Yeah, me, me, Saks, and you guys don’t count as your podcasters.

No, there was one.

There was one unnamed celebrity.

We can’t say what an actor.

No, we can’t say. But we all won.

Well, just give us a genre.

I mean, as an athlete, an athlete.

OK, yeah, I won in that game, but I lost.

I lost a different game this past week and it wasn’t pretty.

Yeah, wait, sexy, sexy.

Are you? What game are you playing?

Yeah, I think he may be playing.

Actually, I mean, beep that out, would you, Nick?

Beep it out.

But we can all laugh at him for being so precious.

Oh, I’m sorry.

Do you LPs think you’re supposed to be in San Francisco investing in startup?

No, no. They know I go wherever the deals are.

Oh, really, Miami?

What did you get a deal?

Would you get a deal on some croquettes and a Cuban sandwich?

Two for one.

There’s no copies there.

When do you think you’ll make an investment in a Miami based company?

Do you think that’ll happen anytime?

It’s happened already.

Hasn’t happened.

Are you in the new free?

Are you in the new company?

I’ve invested in a Miami company.

I’ve got like six.

Yeah, I.

Well, there are some companies that are moving to Miami that I’m already in.

You know, Chamath and I are both in pipe. Right.

And and part at least the CEO of the company just moved to Miami.

So that’s two of four, two or four besties in pipe.

Thanks. By the way.

How did you miss that?

They advertise on your show and you don’t think to try to.

He said that the LP beep that we all share

wanted everything and he couldn’t fit me in.

And I was like, how about a slice?

And he’s like, is that LP me?

No, there’s another LP that Saxon I share

who got their beak significantly doused in that one.

But I’m just going to I’m going to get the kid to give me a 25 basis

points in an advisor share.

So I’m I’m getting a slice no matter what.

Yeah, good. Good luck with that.

Good luck with that. Good luck with that.

The train’s off the station.

The train’s off the station, dude.

That that company’s worth a couple billion dollars

in less than two years of its existence.

Good luck with that, Jason.

OK, well, we call it a make.

I don’t know what you guys are seeing, but my God.

Early stage valuations went bonkers.

I had one company that raised that don’t run it.

I have all kinds of data.

OK, right.

So today we’re going to do some audience questions

and then we’re going to do the state of VC.

We’re running through a deck.

We’re running through everything that is changing right now in venture capital

and early stage investing.

And it is changing very quickly.

Here’s a question from Leonard.

Oh, my zicks.

To what extent are you guys interested in longevity?

In your opinion, what technologies could help us live longer and healthier lives?

Friedberg, that’s got your name on it.

Why don’t we start with you?

On this one, I would point folks to read the book Lifespan by David Sinclair,

who’s a researcher at Harvard, and he’s done a lot of kind of leading work

on basically calling aging a disease and life extension.

So the book Lifespan highlights, I think, a lot of his research and findings

and paths forward for improving longevity.

And basically, it comes down to what he defines as kind of an early switch

that evolved in evolutionary biology in every cell, in every living organism

where the cell is either in growth mode or repair mode.

And the trick is, can you get the gene to switch on that puts the cell into repair mode?

And if you do that, the cell fixes itself and the cell lasts longer,

the organism lives longer.

And so they’ve identified a number of genes that trigger this

and a number of compounds that trigger expression of those genes.

And there’s a number of things you can do lifestyle wise to trigger these genes,

basically to get yourself to live longer.

So fasting is a good one.

And then there’s a bunch of compounds that you can take that mimic fasting

on a cellular level, like metformin and rapamycin.

I’m on metformin.

I think a couple of you guys are on metformin, right?

Yeah. Yeah. And then and then the NAD plus supplements, which you can buy.

You say NMN supplements?

Yeah, NMN, NMN and NAD plus.

So there’s two there’s two compounds, NMN, like Nancy, Mike, Nancy,

and then NR.

And those you can buy a product called True Niagen on Amazon,

which which has those compounds and you take about a thousand milligrams a day.

And anyway, all of this stuff’s laid out in his books.

And it supports a lot of the research that’s being done.

Obviously, fasting and exercise also trigger this gene expression

and enable kind of measures of longevity

to kind of be showing up biologically.

But I think I think it’s a it’s an emerging field.

And there’s a lot of deep work going on.

And as people have highlighted, the process of aging is a biological process

that theoretically we can stop and potentially reverse.

And there’s a lot of new work that’s being done in stem cell therapy

that may kind of elicit some new paths forward here.

So arguably, someone is alive on planet Earth today that could live past the age of 200.

So it’s an exciting field and lots of kind of path forward.

I’ll I’ll tell you for what it’s worth, my regimen

and God, here we go.

Thirst trap photo coming in three.

No. So so I do

the following.

So I take a statin now.

It was 10 milligrams.

Now I’m at 20 milligrams.

I take metformin and all of this I take sort of in a preventative posture

because my cholesterol wasn’t super high, but it wasn’t super low.

It’s like sort of like in the 160, 170, 180.

But now it’s sort of like 120.

And then metformin I take preventatively as well.

I’m not prediabetic.

And then a couple of vitamin D and some other stuff.

But then here are these things that I do that I think could be valuable

for some folks listening.

There are these places now that exist, they’re popping up.

One company that you can check out is called Pre Nouveau, P-R-E-N-U-V-E-O.

They’re in Vancouver, they’re in L.A., they’re in Redwood City,

so mid peninsula for those in Silicon Valley.

And what you can do is you can get a head to toe MRI.

So, you know, there’s no radiation.

You know, you could do these things, you know, every other week if you wanted to.

It takes about an hour.

And what happens is they can basically look through your entire body,

your musculature, your organs

from literally from the tip of your head all the way down to your ankles.

And they can spot a lot of stuff that may not otherwise be seen.

And so, you know, every three or four years to get one of these scans,

you could see a lesion, you could see the beginnings of a tumor.

You know, I did one a few weeks ago, Touchwood.

It was great. Nothing, nothing.

So much does it cost?

There’s a range of prices, and I think those prices will come down.

The range of prices are from like fifteen hundred to twenty five hundred dollars.

So it’s not expense. It’s not cheap. Sorry.

But here’s what they’re able to do.

They’re building a corpus of all these images where they’re running

machine learning on it and they’re getting better and better at identifying anomalies.

And so as a result of that, they’re able to actually take the MRI images

and they can do fewer and fewer scans to get the equivalent resolution.

So two things will happen.

One is the scan time will come down.

Right. So it was an hour and a half.

Now it’s sort of right under an hour.

It can probably be as low as 40 minutes, which is relatively tolerable for most people.

And then the cost will come down into the hundreds of dollars

because you’ll be able to very rapidly assess.

So I do that.

And then the second thing is for anybody with heart disease in their family,

I really implore you.

One of my friends actually is flying down from Toronto.

I’m taking him to my cardiologist in L.A.

and there’s a thing called heart flow.

And what heart flow is, is a contrast CT, which basically means they inject a dye

and then they put you under a CT and they they map out your heart.

And you can literally see the calcium buildup.

You can see the state of your arteries.

And, you know, what probably people don’t know is when you have a calcium score,

you know, most of us, it’s zero.

But when it starts to be non-zero, it doubles every year.

And by the time it gets into the thousands,

you’re basically guaranteed to get some form of cardiac issue.

And so it doesn’t seem like anything if your cardiac score is 20,

except it goes to 40, 80, 160.

And all of a sudden, within five, six years,

you’re really in the red zone for a heart attack or something.

I’ve done it twice now.

Every five years I do it.

And touch wood, you know, my my calcium score is still zero.

But in any event, that’s what I do for longevity.

I kind of preventatively at the cellular level with some drugs

and then just trying to catch cancer and heart disease on the front end.

Otherwise, eat three balanced meals and exercise and sleep a lot.

Saks, you obviously don’t care about longevity.

Any thoughts here?

I mean, Saks has looked like he’s a thousand years old since he was seven.

No, he was when he was in 12th grade.

He looked like he was the vice president of the United States.

Guys, just

just just let me know when this conversation is over.

I’ve been doing my email.

It’s so great. All right.

We got to end my life now.

I fucking hate it.

You know, you guys like I just lost two years, right?

Saks has got an early spot

both on the rocket ship to Mars, and he’s got an inside

VIP to Peter Thiel’s blood boy project.

And so either way, he’s getting off the planet

or he’s going to refresh his blood or both.

So he’s good.

All right. Action bias asks, please debate decentralization of monetary value.

Ultimate threat for insiders.

Power erosion.

I interpret this as a as a Bitcoin question.

So, yeah, I think one of the most interesting things

happening in the world today is this is what’s happening with Bitcoin, right?

It’s and you’re seeing the price go up because a bunch of institutional investors

on Wall Street are all getting into it now.

It’s gone from retail to institutional.

And the narrative, basically, it’s a really profound narrative,

which is it’s the separation of money and state.

So if you think about like one of the most important events in human history

was the separation of church and state where we no longer look to the state

to determine, you know, what religion everyone is going to be.

Well, what crypto is introducing is this idea

that the government cannot control the money supply.

I think that’s what he’s talking about with the decentralization

is that you could have a currency that everybody in the world believes in

that no government can control.

That’s the separation of money and state.

Now, this is just really a narrative right now.

I mean, and who knows if it will actually come true?

But the interesting thing is that if everybody does believe in it,

it will come true.

And so Bitcoin’s been sort of described as the bubble that never ends,

because if everyone kind of buys into this bubble, it actually comes true.

So I think it’s very interesting.

And you’re seeing

because Bitcoin is kind of perceived as the antidote

to inflation and money printing by the government.

I think you’re seeing it take on new urgency now

because the government just keeps printing trillions and trillions of dollars

of of new money.

Doesn’t this threaten government?

So if government doesn’t have control over monitoring financial transactions

and have control over the accounts in which the financial assets sit,

which is effectively the notion of decentralized anonymized wallets,

then how does the government secure taxation,

which is requisite for their ability to fund?

Well, they’re good to fund the state. Right.

And so what happens to the state?

Well, so there’s an enormous amount of leakage that happens today in assets

that actually get financialized, but in the gray market.

And I think the the beautiful thing is, on the one hand,

you know, we become less focused on like the M1 and the M2 money supply,

like the physical, printable, distributable money that we can see and touch.

And it gets replaced with virtual currencies that are tied to other things.

I think what the the the the person who wrote the question is asking really

is more about DeFi and what’s happening sort of like on the Ethereum,

you know, 2.0 ERC-20 contracts, all that stuff,

which is sort of much more next gen, I think, than Bitcoin.

And I think at some point we should deep dive into it.

But what I would say, Friedberg, is all the leakage you have today

goes away in a world of DeFi,

because you will financialize every single asset possible.

You know, you’ll financialize your homes, you’ll financialize your cars,

your watches, your jewelry, your art, you’ll financialize every random thing.

Maybe even your career.

And how people will trade it. Absolutely. Your career.

And and the thing is, by by monetizing it and financializing it,

you can borrow against it, you can trade it,

you can pull forward value into the future against it.

But it’ll all be tracked.

And so as long as a government then says, listen, we’re going to enable it all,

but there needs to be an off-ramp to taxation.

And that’s pretty simple because a physical house exists in the world.

You can’t hide the existence of a physical house.

But it’s not anonymized, right, Samath?

And so, you know, if you want to track it, I mean, that’s the challenge.

No, I’m saying if it is anonymized, then the government can’t track it.

And the government can’t actually.

These are these are two separate things.

Some assets will live anonymously.

And those are the assets that don’t need to exist in the real world.

But I think what this will create is a world where all of these assets

that actually truly exist in the real world, it’ll be fine that it exists

and that people get taxed on it, but it’ll be much more legitimate.

And I think it’ll be simpler.

And so I think people will trade off incremental taxation

for incremental monetized ability. I’ll give you an example.

Let’s use real estate.

There is no reason why every single piece of land

everywhere around the world isn’t written into a ledger

with knowledge of who owns it such that the person that owns it

could trade it, could borrow against it, could sell it,

could buy it, fractionalize it.

Even if you can’t fractionalize in the real world

because your neighbors won’t let you set it up into four lots,

you could do that online, online.

And so today, what will happen is that, you know, that person

has a level of wealth.

And what they do instead take the United States is they lobby, lobby, lobby

to create all this convoluted real estate tax law to make their life simpler.

But if you actually unlocked the ability to focus on revenue versus expenses,

you just wouldn’t focus as much on the taxation because you’d say, well,

I can make so much more money.

If you judge just to, you know, sort of answer the question here

from the from the reader, from the listener,

I think you can really judge this based upon how much it’s being pumped

by the people who own it.

And they are absolutely dogged religious about this.

It’s like talking to and, you know, a person who’s, you know, met Jesus.

And now everybody has to be a Christian.

And you can also look at the people who are opposing it.

I don’t know if you saw Yellen and then Christine Lagarde.

She came out against it.

Yellen’s come out against it.

India might ban it.

And then you have obviously China’s coming out.

They’re digital ones.

So I think it’s going to be there’s going to be a dogfight here

where governments are not going to easily give up their control of this.

And there’s many ways they can make a bunch of red tape to slow this down.

And in countries that are authoritarian, they can outright ban it.

Let’s take another question here.

By the way, there’s like three outcomes here, right?

I mean, you can either see Bitcoin, for example, you know, being banned

and that’s going to be ugly.

And obviously, there would be significant financial loss at this point.

I mean, to Saxe’s point, at some point, there’s so much asset value tied up

in Bitcoin, it’s too big to fail.

So, David, banned by who?

Oh, that’s the Chinese government.

This is what they’re trying to do in some of the states, right?

And they’re trying to make it illegal for citizens to transfer money

in and out of the asset class.

I think it’s I think it’s a bigger threat to countries

that want to impose export or currency controls and export restrictions.

But but frankly, if you’re a country that’s not afraid of currency movements

because you’re not trying to do something oppressive to your people,

I don’t think you have that much to fear here.

I mean, there are other ways of trying to hide assets or hide money besides Bitcoin.

And every transaction, every Bitcoin transaction is written into the ledger.

I think you have to be pretty dumb to try and commit a crime with Bitcoin

because there’s going to be a permanent record in the blockchain forever

of that transfer.

And then there’s companies that that provide that do kind of sleuthing

and try to, you know, unravel.

You think tax evasion in the United States is going to be difficult with Bitcoin?

If I accrue a bunch of value in Bitcoin, am I going to be able to evade

paying taxes on those gains and convert that Bitcoin into physical assets

by purchasing it from another Bitcoin wallet holder?

I mean, how realistic is tax evasion going to be and how much would

because that’s ultimately what the U.S. government would mostly.

Well, so you would convert cash into Bitcoin

and then you want to sell your Bitcoin at some point.

You’re going to have to sell it.

I mean, there would be a there’d be a realization of.

I’m saying transfer it to a seller of an asset of another asset

that that’s willing to accept Bitcoin in receipt.

And so to anonymize wallets.

I don’t know.

I mean, that transaction is going to live on the blockchain forever

and it’s going to live in the books of whoever the seller is.

What are they selling you? A car, a house, whatever.

I mean, that transit a watch.

I mean, look, if it’s a personal item, maybe.

But if we’re talking about a substantial asset

like a house or a company or something, they’re going to need to.

The other side of the transaction is going to need to report

the realization event.

So you’re going to have to have two people collude to engage in tax.

You know what it’s like?

Seems like a really stupid thing to do.

Legally incorporated businesses are going to be mandated to do effectively

identity verification, much like we have to do under the Patriot Act

with all the financial law. Totally. Totally.

Yeah. Ultimately, however, the compromise arises. Right.

Yeah, I’m not I’m not that worried about.

I feel like this whole like Silk Road type Bitcoin will be used illegally.

Thing is like kind of a old meme about it

that I think the fears are like greatly exaggerated.

But the thing that jumps out at me about all the critics of Bitcoin

and I’m not like a pump or whatever, but I do I do own some

is the thing that like all these like critics

don’t seem to understand is the technology.

That’s the common denominator, whether it’s like Howard Marks

or Warren Buffett or Charlie Munger or whoever.

They’re they’re all like great investors or whatever, but they’re not technologists.

And it’s a blind spot.

And the thing they don’t understand about the technology is that Bitcoin

is the first digital asset to ever be created

that you can’t create infinite copies of. Right.

So think about like a song or a photo or a video or anything that’s digital.

You’ve always been able to make an infinite number of copies.

Isn’t that what the word digital means is that it’s infinitely copyable?

So how do you have digital money that can’t just be infinitely copied?

Obviously, that would destroy the value.

And that was the genius of Bitcoin is that every transaction

is written into this ledger.

The blockchain is decentralized.

And nobody over the last decade or so has figured out how to counterfeit Bitcoin,

how to make a duplicate, how to double spend Bitcoin.

As long as that remains true.

Then Bitcoin can serve as money if everyone believes in it.

The day that someone figures out how to counterfeit a Bitcoin,

how to double spend it, it’s all worthless.

But a lot of people have been trying over the last 10 years.

They’ve never figured out how to crack it.

By the way, that’s a great it’s a great transition to the next question.

Sorry, I’d like to interrupt here, but no, it’s a perfect transition.

And next up, Adeel says, can one of the best

he’s explained the power of quantum computing and how it can change

industries like medical, pharmaceuticals,

any good companies that are leaders in quantum computing?

I’ll I’ll take a cut at this one.

So and the reason I pointed it out is because a lot of people

do talk about quantum computing,

potentially being a path to cracking the hashing functions in Bitcoin

mining and potentially overwhelming the network and effectively

counterfeiting the Bitcoin ledger.

And so technically, a quantum computer is a computer that uses qubits,

which is a storage of a quantum state versus a storage of a binary state,

which is a binary digit, which is called a bit in traditional computing,

classical computing, a one and a zero, a one and a zero and a quantum or qubit,

a quantum state can be a much more dynamic function.

And so it’s a it’s a state that is very analog and very representative

of kind of a much more kind of broader condition than just a one or a zero.

It could be a one, a zero or neither.

Right. It can have neither state as well about it as a wave function.

And and so a qubit can only exist in a in a piece of matter

where you can hold the fidelity of a quantum state, meaning it can’t be disturbed.

So right now, all quantum computing gets disturbed.

It all has some error prone context to it.

And so in order to use qubits to do calculations,

we use what’s called quantum error correction on those qubits.

And so we adjust the qubits and the output to try and resolve it.

A qubit with no errors is called a logical qubit.

And a logical qubit has not been built.

It would require very, very, very low error rates.

And there’s a bunch of and there’s a bunch of theories around when this is going to happen.

When are we going to have truly logical qubits?

When does the error rate get low enough that these qubits are truly kind of useful?

Now, there is an estimate that the number of logical qubits

needed to crack RSA 2048, which is the big kind of encryption standard

which could kind of break the whole cryptocurrency model.

It would require about 4011 logical qubits.

Today, the largest, the largest quantum computer has about 100 qubits that are very noisy.

And so it’s less than one logical qubit.

And so we would need somewhere between 100,000 and a million qubit computer

to be able to have enough quantum supremacy

to be able to tackle a project like cracking RSA 2048.

And by some estimates, and some people have tried to estimate when this will happen,

and the estimate currently by some researchers is that this there’s a less than 5% chance this happens before the year 2040.

So we’re talking somewhere between the year 2040 and the 2060,

when we get a quantum computer that has enough logical qubits to be able to crack a problem,

like, you know, RSA 2048, and basically make all crypto fail.

And between now and then a lot of people are working on quantum cryptography,

which is new methods of encryption that are kind of built for the quantum era and the quantum frontier.

Now, what’s more interesting is that over the next hundred next 10 years or so,

the current super noisy, super low fidelity quantum computers can be used to simulate quantum states,

which is the condition of atoms and molecules, and use that to do better modeling of physiochemical properties of material.

That’s where the breakthroughs will happen in the next decade.

So all the hard discrete problems that we kind of theorize about cryptography and other stuff, that’s decades away.

This decade, we are already going to start to see quantum computers have breakthroughs in how material how atoms and molecules interact with each other.

For example, finding proteins that can do a better job of having an enzymatic reaction in the physical world,

where we can now potentially pull nitrogen out of the atmosphere to make fertilizer or drugs or,

or specific protein targets that can go in the human body and have specific functions by modeling what we can’t do with traditional computers today modeling the quantum state of the universe.

We can do that with traditional computers today modeling the quantum properties of those molecules and how they interact with other molecules,

and then building really cool predictive models that we can then turn into products.

And that’s going to be chased really hard this decade, everyone’s going to be going after it.

And we already have enough compute power.

I don’t think that there’s any leader in quantum computing today.

These are all still science experiments.

They’re all breadboards, IBM, Google, Microsoft, a bunch of research labs, a bunch of startups are all kind of basically doing the same thing with different types of qubit technology.

But they all have very high errors.

They all have very low qubit computers.

And so it’s still unresolved who’s going to come out with a company, two companies to follow our D wave, which was started in 99.

So just to give you an idea of how long people have been working on says 22 year old company, I know, Steve Jervison has been backing it for now in its third decade.

And then ionic, is that the other one?

I o n q, I think like quantum facts, right?

Quantum computing is like fusion.

Yes, it’s like it’s like a technical problem that has attracted people who’ve had more money than common sense.

And it just basically a way to burn an enormous amount of money over 20 or 30 years.

And the problem with that is that you start to build in technical cruft, anything that is still in R&D phase 20 years in needs to get scrapped and rebuilt from scratch, because everything has changed, including the people, even the 20 year olds that started are now in their 40s and have kids and just have a

shift. It’s a great point to mark.

And so like, you got to just scrap these projects and start all over again.

Because the problem is, you need somebody completely naive to look at this problem in 2021.

And say, Well, okay, how are we actually going to really solve like, the coherence problem?

I don’t know, how are we going to build a Gatorade?

I don’t know.

And you have these very formulaic ways that we knew based on what technologies were available in 99 or 2000.

To start with, and I think that’s probably part of why we framed the problem as largely sort of this thing of like, okay, maybe there’s like a integer factorization thing you can do.

And it’s like, I don’t know, I’m, I’m deeply skeptical.

Yeah, well, I agree.

And by the way, this is why.

So can I just say one last thing?

This is why AlphaFold beat quantum computers to the solution of protein folding.

And and the reason was, they were just like, we’ll just take a different run at it completely different people, a completely different technical framework and modality, and a completely different risk profile and age as well.

A company to keep an eye on in the fusion space, Commonwealth Fusion Systems.

I just bought MumGuard.

Wait, Zach, what were you gonna say?

What I was gonna say is that the main thing I was thinking about while you’re giving that dissertation on qubits, or God knows what is, is I would never invest in this.

That’s all I was thinking is I would never invest in this.

Yes, exactly.

On SAS and Mars.

It’s exactly what you said.

Definitely seven queens and eight kings and five aces in the deck.

These are science fair experiments, you know, with indefinite timeframes.

This is basic R&D that should be done at universities.

These concepts are not ready for commercialization.

Exactly what they said about AI.

And then now it’s infected every company.

So that’s not true.

Just because there was a cover.

We’re saying this years ago, Jason couldn’t get fun.

I completely disagree with you.

DeepMind could not get funded in the beginning.

No, complete, completely disagree with you.

Because, okay, there was there was a practical commercial revenue generating opportunity for AI and machine learning.

Literally, from the start of computing, it took several iterations.

There’s no use case for fusion energy.

I mean, of course there is.

No, I’m not.

But it’s still at the basic R&D.

It’s still basic R&D.

Yeah, I will.

I’ll partially agree with you, Jason, in the sense that I was not investing in AI 10 years ago, because I thought at that stage it was still in the realm of science fiction.

But we just announced two deals the last two days to see deals viable, which is basically an AI voice of the customer.

It slurps in all of your customer feedback and then gives you answers.

And then the other one is.

The copywriting one.

It’s a copywriting AI called Copy.AI, which literally writes your site.

Trying to get a slice right now.

Yeah, yeah, we might give you a slice, Jason.

Stop being so skeptical.

But yeah, but here’s what’s changed, right?

Is these are seed companies with just a handful of employees.

They’re built on GPT-3.

So you had this basic R&D done.

It creates this platform called GPT-3.

It’s like AWS, right?

Yeah, you can now build companies on top of that.

So I mean, look, you know, what I invest in are the commercialization of new technology waves.

Those technology waves happen because of deeper R&D.

What do you think about VR and AR?

Because there’s the same conversation with VR and AR.

Like, are these worthy investments or not?

I think I think Saxe’s point is such a good one.

Because what he’s saying is, is what I think has happened over the last century.

The best role the government can provide is to take on that technology risk,

that large capital intense technology risk.

This was the case with the Manhattan Project.

And we got nuclear energy out of it.

It was the case with Apollo Project.

We have the space industry as a result now.

And it’s what happened with the Human Genome Project.

And now we have an incredible genomics revolution and ARPANET.

And that extensive early stage de-risking requires an incredible amount of capital

that’s very low returning.

It doesn’t return anything.

What Saxe is saying is later is the commercialization where…

Do we have a heuristic, a theory, a best practice around when something goes from

a research project to being commercially viable?

There are signals.

I mean, platformification seems like one that you pointed out, David.

If it’s a platform, and you can use it easily.

Yeah, I think you can tell when the amount of capital required to get it off the ground

goes to something reasonable, like a few million dollars,

as opposed to hundreds of millions of dollars.


And Jason, you’ve talked about this, that any company that’s trying to raise hundreds

of millions of dollars or has a billion dollar plus valuation before shipping a product

is presumptively fraud.

There’s still too much R&D involved.

I mean, look, venture capital is a milestone-based investing model.

You take a little bit of seed money.

You create a prototype.

You get some proof.

Then you raise a series A. You get 10 million.

You get some customers.

Then you raise 25 million, and you scale the company.

And it’s based on milestones.

It’s actually a very efficient way of investing.

And when somebody wants to skip over all those milestones, they say,

no, we need hundreds of millions of dollars to launch this thing.

You have to ask why.

Is this idea really ready for commercialization?

What’s Chamath’s response to that?

Because Chamath, you’ve done deep tech investing, and you’ve done…

I mean, Virgin Galactic would fall into that or no?


So how do you think about deep tech investing, Chamath, and where there’s a role for venture

capital, private market dollars?

Yeah, I’ve done a lot of deep tech investing.

And my whole thing was I’ve always looked at the point where something is completely

de-risked technically, and it’s about then the exploitation of a market.

Otherwise, it’s exactly what David said.

So I’ll give you an example.

A company called Relativity Space is now the second most valuable

private spaceflight company after SpaceX.

Okay, YC company, I led the series A.

What were they trying to do?

Their stated goal at the time was we want to 3D print the entire rocket and the entire


And I said, wow, okay, well, when we did the math, and we tried to figure this out and

have the same launch capability as SpaceX, all of it comes down to, okay, well, how do

you want to de-risk this?

And what Tim and Jordan’s first idea was, well, first, we want to basically prove that

we can actually get a certain printing capability done because you’re talking about these

extremely, you know, energy intensive, extremely technical printers, and effectively writing

printer drivers, right?

And to be doing it at a scale where you can hand that off to NASA, and they can take that

engine, literally strap it down with chains, called the hold down test, fire the engine

and say, it works.

Doesn’t blow up.

Doesn’t blow up.

And I said to Tim, how much does that take?

And Tim was like, I can probably do that on 10 million bucks.

I said, you’re done on $10 million.


And so it was 100 million.


The only person that would have written $100 million check to de-risk that doesn’t understand

what they’re trying to prove at that point in time.

Because what he was trying to prove was the the ability to use the printer.

He wasn’t saying I’m trying to build a next generation rocket motor.


So similarly with Virgin, you know, Virgin got to a point where it’s like, it had flown

demonstrably in the air.

So what did it prove?

It proved the flight profile worked.

It proved the engine work.

It proved all the navigational componentry work and approved the safety envelope work,

which means that it could basically act as a glider under all kinds of boundary conditions.

That’s an enormous amount of technical progress.

And then at that point there, I’m willing to invest billions of dollars.

And so to David’s point, you have to have a revenue model early too.

Like that’s one of the things about being an entrepreneur is figuring out how you stay

alive while you answer these questions.

And you came up with a brilliant one or whoever was doing Virgin Galactic, which is people

will overpay.

No, but Virgin was a 15 year process where Richard Branson, to his credit, did exactly

what David said.

Here’s $10 million, get to milestone one.

Here’s $25 million, get to milestone two.

He did the exact venture capital model.

It’s just that he did it by himself.

I think what David is saying, which I agree with is you should never short circuit that

and say, here’s $500 million pre Series A.

Yeah, I agree with that.


I mean, Magic Leap.

You’ll be working at something for 20 years with nothing to fucking show for it as infusion

as in quantum computing.

All right.

You end up with like you end up with a Magic Leap or Theranos or even

it looks like it’s a fraud, but Magic Leap just looks like it’s technically incompetent.

Or it’s too hard of a technical problem to solve in the amount of time and the amount

technical incompetence.

Well, I don’t know if it’s incompetence just might be a it might be a 20 year problem as

opposed to a five.

But why are you taking this emotionally?

Technical incompetence is the opposite of technical competence.

Competence means you can do it.

Technical incompetence.

I thought you were saying that that group of people is incompetent.

I’m saying the word technical followed by the word incompetence.

Technical incompetence.

Okay, when you’re saying it, I think you’re describing the person not the problem.

It could have been too hard to lift for them.

So yeah.

Okay, well, the last question is about access to private equity.

But let’s just go into this deck here.

Now, one of the things we wanted to talk to today, Chamath had a good idea.

Venture capital is changing rapidly.

The last decade has seen more change in venture capital than I would argue the four decades,

or five decades that venture capital has existed.

In other words, more change.

And we’re gonna go through some of those changes, how it affects the entrepreneur,

how it affects the investor.

Chamath was nice enough to put a deck together.

And then I guess Jason will figure out a way to post this into the YouTube or something

like that.

And yeah, you know what, we’ll put in the show notes a link to this Google presentation.

And Nick can pull up the slides when we’re talking about them.

I think I think if folks can give us feedback, this is kind of a new thing for us.

We’re trying to experiment, which is sort of this is like a half teaching half discussion

on something we all wanted to talk about.

And hopefully you guys get some value from it.

But tell us if it’s not.

So I want to thank Carmen Collins on my team who helped put this together.

But let me just go through this state of venture capital.

So a couple of high level points.

There’s like some really important trends at play.

The first is that there really is now underneath a massive change in the players in this game.

Founder demographics are changing slowly but surely.

We’re going to go into that in a second.

Traditional VC investors are getting disrupted.

We’re going to go that we’re going to go into that.

And then this model, which I love of let me know how I can be helpful,

quote unquote, basically eroding and ceding ground to what we call solo capitalists.

And we’ll talk about that, which is probably the most disruptive trend in venture.

Second, we’ll talk about the inflation in the amount of money that’s going into these

companies, which really means more money at higher prices, and why that’s good in some

ways and actually bad in some other ways.

This goes back to David’s point of, you know, not being forced to generate milestones sooner.

And then the third is that it’s really now a founder’s market.

And I think this is really important because, you know, you’ve seen an enormous amount of

dilution and lack of control for founders and employee teams and companies.

And I think that there are some really disruptive new ways that completely usurp traditional

venture, non diluted forms of financing.

We’ll talk about that.

So let me just level set for you guys.

I asked the following question, what are the demographics of the United States?

And here’s what they are.

In the United States today, 59.7% of people are white, non Hispanic, 12 and a half percent

are black, 5.8 are Asian, 18.7% are Hispanic, and 2.3 are multi race.

If you map that to VC founders, 77% of VC founders are white, 1% are black.

17.7% are Asian, 1.8% are Hispanic, and two and a half are multi race.

So amongst multi race, Asian and white, you either are at or over indexing your

representative population and blacks and Hispanics.

This is not anything new, but massively underrepresented.

If you take it from a gender, females have lower representation among founders, but it’s


So the US is basically 50 50 male, female, female founded companies were 23% of all deal

activity in 2019.

That’s, that’s pretty good.

Up from 12% in 2010.

Although racial diversity is still pretty lacking, which we know, and then the young

tech bro stereotype is cracking, which is this is incredible.

2019 study in the Times showed that the average age of a tech founder is David Sachs.

What do you think it is the average age of a tech founder?

Median or average?

Median or median average?

Well, I saw I saw your deck.

So isn’t it something like it was surprisingly

35 40?



No, I’m seeing a lot.

I think I don’t know, just to pause here for a moment.

What do we think?

I can still found a company.

You can.

What do we think is given we had the longevity question earlier, and then you have people,

you know, generating wealth and starting companies in their 40s, 50s and 60s, who then

underwrite it themselves, right?

Until they get to product market fit and then raise money.

What do we think is the best zone for an entrepreneur in terms of having a great outcome?

I’ve always thought that the look I when I how old was I was 31 32 when I started social capital.

I mean, this is a multi billion dollar enterprise.

I feel like I’m reasonably successful at it.

But I was preparing for the first 13 or 14 years of my professional career.

I learned some good things.

I learned some bad things.

I learned tactics that worked.

I learned strategies that didn’t work.

So, 30s or 40s or 30s to 50s?

In my experience, for me, and I think it’s for personal for everybody,

I was best positioned to know what to do and at least iterate in my 30s.

And I think in the absence of an idea that has some network effect or something that’s

sort of like supernatural outside of your own control, I think the older you are generally,

probably the better prepared you’ll be.

Yeah, I agree.

I mean, I did PayPal when I was still in my 20s, but I wasn’t the founder of the company.

I was recruited to it at a very early stage.

I didn’t really start Yammer until well, I guess I started the predecessor company Genie when I was


And then Yammer pivoted into Yammer when I was 35.

I mean, absolutely.

That’s like a good level of preparation, you know, unless you have a spectacular

idea for a startup, you should probably get some experience first.


Freeberg, any thoughts there?

On what’s the kill zone, best time to launch companies in your mind or investing companies

or where founders?

I mean, look, everyone’s got their own path.

You know, I mean, Zuck and Sergey and Larry and Bill Gates, they started right out of

college without any experience.

But I mean, I had two jobs in tech before I started my first company in 2006.

And so, I had a lot to draw from and that really informed me.

But I think everyone’s different.

I mean, some people…

If you have the idea, by all means, do it in your 20s.

You know, but…

I mean, by far, the greatest kind of like measure of whether and when you’re kind of

prepared for this is your ability to continue learning.

You know, continuous learning, to me, is one of the greatest predictors of entrepreneurial


And all the guys that have lasted for decades, from Bezos to Zuck to, you know, Larry and

Sergey, you know, they were continuously evolving themselves because they were continuous learners.

Bill Gates is the penultimate example of this, right?

I mean, this guy’s reinvented himself 1000 times.

That, what you said is so important.

I’m going to change my answer.

I think I started Social Capital when I was actually the most able to get out of my own

way and learn continuously.



You know, one thing I’d add to this is it’s so much easier to be a founder now today than…

I mean, look, I remember I joined PayPal in 1999.

That was my first startup.

It was like really hard to get into entrepreneurship in the 1990s.

You know, the VCs had tremendous power and control.

They would routinely replace founder CEOs.

You know, everyone had to go to Sand Hill Road to get capital.

It was hard to even know how to network your way to Sand Hill Road.

It was just much, much harder to be a founder.

It was much harder to raise money.

It was hard to know what to do.

And then I think actually one of the things that really changed things was with blogging

emerging in the mid-2000s, it led to a proliferation of information where now,

you know, other founders started blogging, investors started blogging,

and there became a wealth of information out there so you could learn how to do it.

And then, of course, you had incubators and so on like YC.

So, there became more of like a playbook for just like how you actually get a company off

the ground.

When I graduated in law school, which was 1998, I knew I wanted to get into business

and entrepreneurship.

I really had no idea how to do it.

And if it wasn’t for a phone call from Peter Thiel, I’m not sure I would have gotten into


You know, but now everybody knows what to do.

Can I ask you a question then?

So, let me give you a stat and I’ll ask a question.

What do you think that story would be, David, for somebody that wasn’t a white man?

So, here’s the data.

The percentage of female VC decision makers has grown by more than 2x.

What that means is about firms over a billion dollars, about a quarter of them have at least

two plus female decision makers, but 61% of them have zero and 80% of venture firms still

have no black investors.

How do you correlate or intersect that idea of ease of starting a company with the pattern

recognition of those folks and the inability to sort of maybe map to people with black

skin or women?

I mean, I think that what Silicon Valley and what venture capital represents is opportunity,


And we have to extend that opportunity to as many people as possible.

I mean, that’s really the key here is we do need to make it as a business as a company

is we do need to make it as widely available as possible.

By the way, Chamath, I mean, one way to slice things is the percentage of diverse representation

within the ranks of venture and private equity.

But there is an equivalent scaling in the number of venture firms and the amount of

venture capital since Sachs and you and I and all of us kind of entered the technology

industry kind of early 2000.

And the number of firms that exist today that are kind of micro firms and scaled firms,

I think, presents a much larger set of opportunity.

You’re right.

There are still standards and there are still challenges in diversity and kind of having


But there is so much more access than there has ever been.

And that’s really changed the landscape.

I mean, folks coming out of college can get a million dollars that was kind of unheard

of back in 1999.

Or, or, or, or, or the reality is like there’s so many incubators.

I mean, it’s not as if Jason or YC or any of these folks give millions of dollars, right,

Jason, like these checks are still really small.

So the point is, you can build something if you have the skills to build something.

The gap right now is that there’s a lot of people who have ideas about what they want

to do, but they have no skills.

And I think what we found in a vibrant market like today, I mean, this is the most vibrant

I’ve ever seen it.

There’s at least three or four times as many startups to choose from at the earliest stages.

And what we’re seeing is the number of VCs has not grown at that level.

It has grown.

The number of players has grown, but not at that level.

Therefore, the average quality of a deal has gone up.

The average quality of a funded deal has gone up, but the average quality of a startup has

gone down.

Does that make sense?


So the ones that get funded are better than ever.

But the one, the average is lower because there’s so many doing it.

And then just the best piece of advice I have is when we talked about continuous learning,

is if you are not building the product in some way or selling the product in some way,

then what are you doing at this startup?

Like you either build it or you sell it.

Like, it really isn’t much more there.

And a lot of people just have ideas and no ability to execute.

You really have to be a developer, designer, UX person, marketer, something in terms of

getting this product out to the world.

What, what do you guys think about this other trend, which I think is really important,

which is the atomization of these firms.

So, you know, we’re moving from a world where people used to care about name the brand,

Sequoia, XL, and then now they name the person, right?

And they’ll probably follow that person wherever they are.

So what do we think about that?

There’s a really interesting tweet from Eric Thornburg.

He said, founders don’t want to raise money from institutions as much anymore.

They want to raise money from individuals.

And then if you marry that with what’s happening with AngelList and all this other stuff,

isn’t that the trail of breadcrumbs for how like VC just kind of,

in some ways, just kind of gets blown up the way that it’s normally been done.

I remember as a founder, when I started my company in 2006,

there was a lot of this conversation in as, as Saks pointed out in the blogger community,

blogging community and with like various websites that rated VCs.

And there was generally a trend in the support network among CEOs and venture firms

of talking a lot about making sure you pick your partner, don’t pick the firm.

And so this, I don’t know if this is necessarily a new trend, Chamath.

It’s certainly something that I remember being top of mind 15 years ago

when I started my first company.

And so much of it was about making sure you have the right partner,

because that’s who’s going to be on your board.

That’s who you’re going to spend time with.

That’s who’s going to recruit executives with you.

That’s who’s going to be helpful in finding your next round of funding for you.

And I feel like that’s always been the case.

But you’re right, the brand value of a firm has certainly become less useful.

And folks have struggled to kind of figure out, I think, a solution here.

I mean, you see what Andreessen Horowitz did,

they launched in 2009, and really focused on kind of being this kind of

full service provider to startups.

And I don’t know how much that matters as much anymore,

as much as making sure you’ve got a great partner from the firm that’s

helping you with your business.

I don’t know.

It’s actually, you’re right, Freeberg, that’s a continuing trend.

What I’ll say is the top firms are still as attractive or more attractive to founders.

The loser in this, I believe, is the mid tier firm, or the lower tier firms that actually,

none of the partners there are all that great, the performance is not that great,

their value add is not that great.

But when you do get a Sequoia or an Andreessen, and I put Kraft in this as well,

when you get one of those all star VC firms to join your board specifically, that is the key.

When they join the board, they own over 10%, you are anointed in a way that is transcendent,

you will get pounded with inbound from the second tier and third tier firms who want to

triple your valuation and give you 20 million bucks.

It happens like clockwork.

In fact, there are a couple of firms like, was it DAG the one,

Sachs, that would always follow on Sequoia deals.

And so there were firms that were built around this concept.

That was their LP pitch, DAG’s LP pitch is we just, we will mark up every Sequoia deal.


So it was one page.

So it’s like, if you can’t get into Sequoia,

and you’re willing to wait an extra round, invest in DAG.

Well, and then now, I think the big trend here is those firms Andreessen

and Sequoia are now full stage where they have the late stage growth.

They have a scout program, they have a seed program, they have a Series A program.

So the full life cycle,

it’s not those guys.

Also, it’s just it’s all these other big crossover guys that have come down Tiger,

CO2, Durable.

I think that’s the biggest trend of the last 15 years, Chamath.

And I think it is what has enabled the proliferation of early stage startups

and enabled the valuation increments in the capital that’s flowed in the early stage

is the scale down from the big guys.

I just want to kind of do a quick walk down memory lane.

Because when you guys said you wanted to talk about this,

I kind of remembered.

I got my Series B term sheet in 2008, I guess it was, or 2009.

And I had three venture firms.

Andreessen was one of them that gave me a term sheet.

And the interesting thing about at that time with Andreessen was they gave me a term sheet,

I was trying to raise $30 million.

And they said, we want to give you $40 million and they up the valuation significantly.

And there was a… I ultimately went with Coastal Ventures.

But there was this trend that Andreessen was kind of imparting.

And I heard about it a lot from other entrepreneurs,

was that they were going out and offering more money than the founder was asking for

or seeking at higher valuations.

And it was this trend towards saying like, go grab the market.

Because the interesting thing about web scale economics and web scale businesses

is you get so much leverage, and you can get extraordinarily rapid growth.

I mean, the rate of growth could be infinite.

And the leverage could be infinite.

And so…

If you do it at the right round, I think that’s…

But so much of this was… And then obviously, so that was a huge step up.

And I remember Andreessen Horowitz, beginning 2009,

kind of started to build a reputation for doing this of kind of

putting larger checks out and saying, go scale.

And then the big crazy thing was the crossover guy started coming in and

offering bigger checks in this proven stage, growth stage kind of funding.

And then obviously, the big step up was SoftBank.

And SoftBank with $100 billion Vision Fund.

And ultimately…

What exactly did that disrupt, Freeberg?

Just hang on.

So when all of these things happened,

those large chunks of capital became available.

And the valuation step ups were so significant for these later stage startups,

that the money flowed down.

And more money was raised in earlier stage venture

that enabled this proliferation of capital and this proliferation of new startups

and enablement of startups at the earlier stage,

because of all the crossover money that started to come in

and the blitz scaling of proposals,

and lots of money that was being thrown at the later stage.

That, to me, felt like the reason all of the earlier stage stuff proliferated

was because of the amount of capital you’re getting at the later stage.

You’re absolutely right.

And now 10 years later, here’s where we are.

In early…

SPACs are the next step, Chamath, because like…


I think what you did…

Pre-2009, there was $10 billion a year in SPACs.

Then when you started this in 2009, it stepped up to…

2019, it stepped up to $13 billion.

Last year, $80 billion was raised in SPACs.

This quarter, $100 billion in SPACs.

And SPACs are the new crossover investing.

It’s taking growth stage, private equity style risk in the public markets

with this proliferation of capital.

And we’re seeing the benefit in the early stage.

And founders and entrepreneurs are seeing the benefit

because there’s so much access to capital on the back end.

You can take more risk on the early end and you can make more bets.

And I think it’s the next step up.

And we just keep seeing these step ups.


I tend to think that the growth stage is the most troubled and challenged

because at the early stage, you can get a guy like Sachs or Jekyll on your board

and you can grind.

And I think that that’s really important to get to product market fit.

And at the public stage, you can get somebody like me

and we can help transact and actually help optimize

and run the business for scale and value.

But in the middle, you have all these weird dynamics that no longer…

maybe don’t make as much sense.

So just to give you a sense of it, the average deal size, okay,

so the typical round is up 3x over the last 10 years.


That is absolutely anecdotally my experience.

In late stage, investors are doubling and tripling down on these mega deals

so that that average round size is up 5x in the last decade.

The typical pre-money on a growth stage deal in 2010 was 100 pre.

This is for the top quartile.

And it’s now…

or sorry, this is for the average.

It’s now…

This is for a growth stage?

Yeah, growth stage 100 pre is now 570 pre.


Yeah, it’s getting crazy.

It’s really getting crazy.

Tiger, it says here in the notes,

Tiger Global has announced the deal, according to PitchBook, every 48 hours in 2021.

That’s fabulous.

That’s fucking fantastic.

What Tiger, I think, has figured out is they started as public market investors

and worked their way down the stack, right?

So they’re very familiar with the public market valuations.

They’re seeing that these SaaS companies are…

I remember 10 years ago when I was doing Yammer,

we thought that the best outcome that you could have as a SaaS company

was like a $1 to $2 billion exit.

That’s why when Microsoft offered us $1.2 billion in 2012, we took it, right?

We’re like, we could work five more years, maybe get to a $2 billion outcome.

Well, now you’re seeing what Slack just got acquired by Salesforce for close to $30 billion.

It’s pretty routine to see SaaS companies IPO-ing it now $10, $20, $30 billion and up.

And so the exits are just so much bigger than anybody thought 10 years ago.

And we were the optimists, by the way.

There’s a good tweet on this by, it was Jay Malik.

Basically, he gave some stats.

He said that if you’re wondering why everyone wants to invest or be a VC today,

the stats from PitchBook provide an answer.

We had $43 billion in exits in 2010.

We had $290 billion in exits in 2020.

So we had about 7x, roughly, greater exits over the course of a decade.

Now, the average deal size has grown 3x and there’s a lot more money going into venture capital.

But the reason why you’re having all this money go in and all these new players is because

the outcomes are so much bigger.

And then he said, and I agree with this, wouldn’t be surprised if VC hits $1 trillion by 2030.

So we’re seeing just that.

I mean, I remember 20 years ago, when I first got into the business,

like Silicon Valley was a small little concentric circle around Stanford.

And now it’s spread to San Francisco and the entire Bay Area and to other cities.

And it just keeps getting bigger and bigger.

It’s the digitization of every market, right?

I mean, every traditional business, every traditional industry is being digitized in

some way or another.

And so it’s no longer a tech enabler of other industries.

It is the industry itself.

We know that the brand really matters in the early stage because they anoint you and they

bring so much value in terms of working with you to solve problems.

We know with SPACs, whoever, and IPOs, whoever is anointing that really matters, right?

The sponsor.

But in the middle, is all that cash now moved to a game of who will pay the most for the

least rights?

In other words, series B to, you know, when you get involved, Chamath, is that just…

It’s such a good point.

So what you’re now teeing up, Jason, is this next big category, which is,

if it’s undifferentiated capital, at some point, you’re going to go to the logical conclusion,

which is, I don’t want any dilution from this.

I’m happy to take dilution in the series A when I get, you know, Kraft or Sequoia or


I’m happy to take dilution in the IPO because that’s sort of the necessary process of, you

know, diversifying the stock ownership, getting, you know, my users and my customers to be

able to own the stock, etc., etc.

But in the middle, now you have these companies like Pipe and ClearBank, where now all of

a sudden you can grow, Jason, in your B, C, D rounds, and you have zero dilution.

So if you’re a founder, you know, the best formula is going to be take series A and seed

capital from an expert, single, you know, GP brand person who knows that business category

so well, right?

If you’re starting a SaaS company, you should probably get your seed from Sachs, you know,

raise your A from some expert or, wait, let me say it differently, seed from J-Cal, A

from Sachs, and then go to Pipe and ClearBank and fund it all based on your recurring revenue

growth, and then go public via SPAC.

So just to give you some data that I got from Pipe and ClearBank.

Which means you would, just to give people an idea of what the cap table would look like

there, you would dilute 10% in your seed round, 20% in your A, now you still have 70% of the

company, and you just sell your yearly contracts ahead of time to Pipe, and you’re done.

By the way, can I tell the story about Pipe?

So Pipe…

Yeah, it’s kind of painful.

Thanks for including Freeberg and I.

David, David, can I give the stat from Pipe and then you tell the story?

Yeah, go ahead.

Sorry, you guys are all investors in this company?

No, not me and you, David.

They let us…

Our beaks are dry.

My beak is so wet.

My beak is so wet.

Can we get a profile of that beak?

Let’s see.

I don’t know why I’m raising my hand.

Oh my Lord.

It is…

People don’t realize, it really is…

Hold on.

Do it one more time and let me compare it to this.

Okay, it’s a beautiful beak.

No, I’ll tell…

Let me tell the Pipe beak wetting story because Harry, the founders, told the story.

He came in to meet with me in my office at Kraft.

This is pre-COVID when people actually met in person.

Our principal who’s based in LA, Michael Tam,

knew Harry from his previous startup and brought him in.

I heard the pitch, which is basically to advance the full value of these contracts

for SaaS companies and others.

But it was so obvious, right?

Because if you’re a SaaS company, you spend roughly about a year of revenue on CAC,

customer acquisition costs.

But the customer only wants to pay you monthly.

And so you have this huge negative cash flow cycle.

What if you could just take that contract and monetize it right away,

get the full value of the contract advanced,

then you can plow it into the next customer acquisition cost.

And you don’t need to dilute yourself with venture capital.

I said yes to Harry in like 15 minutes.

I think it’s the quickest I’ve ever given a term sheet.

We invested $2 million in the company at a 12 cap.

And we did the deal that day.

So within nine months of launch, Pipe has connected 3,500 customers

and over a billion plus of ARR to investors willing to purchase that revenue.

And to be clear, it’s a marketplace.

They’re not buying the debt.

Anybody can go on the marketplace and say,

I will buy Slack’s revenue for $0.91 on the dollar,

but something more speculative, they might pay $0.85 on the dollar.

This is a brilliant thing is that they’re not providing the lending off their own balance sheet.

As opposed to Clearbank, which does and charges 6%.

I’m done talking about your book, unless you guys share.

Hold on, I’m going to go to it.

I’m going to go to it.

This is fucking bullshit, guys.

Listen, I’m going to go watch some fucking shares.

Let’s go.

I’m going to go ahead and do my email now.

Yeah, let’s do it, Freeberg.

Hey, Freeberg, let’s launch a bio company together and we’ll block out these beaks.

Go work on your life extension.

We’re working on our monetary extension right here.

Yeah, you need more money.

You need more money.

So Clearbank works with e-commerce companies.

So what you do is you stitch in your connections to Shopify and Stripe, etc.

They’re able to monitor how well you do.

And then they’ll basically help finance you again, non dilutively.

So Clearbank companies captured 55% more growth in 2020 than the prior year.

So even in the midst of COVID, these companies did really well.

They have revenue based financing.

They’ve invested $1.6 billion to date.

And it turns out that, you know, their investor composition,

eight times more women funded than traditional VC.

By the way, I want to be clear.

I was also a Series A investor in Clearbank.

I mean, I am such a believer in this middle section of venture disappearing.

Like when you have these growth rounds,

they’re undifferentiated and they shouldn’t be dilutive in any way, shape or form.

The founders should figure out how to grow non dilutively the minute that they have some

semblance of product market fit.

So then the dilutive points are the bookends.

Yeah, this was kind of the idea with like Indiegogo and some of the GoFundMe types or

not GoFundMe, the other things where you could basically pre-sell consumer products too,

right, where you could get funded in a similar way.

And you could see the same transitioning into kind of hardware businesses and other and

other consumer businesses, right?

There’s an even bigger trend that happened that I can talk to, which is equity crowdfunding CF,

but I don’t want to take you off your deck.

So do you want to keep going on the deck or you want to stop?

The only last thing I say is that the other big thing as Friedberg says is like,

so let me just summarize.

So it’s kind of like, I think where we’re all going to is we see

the venture capitalist changing.

The financial stack, yeah.

It’s going from organizations and these amorphous financial orgs down to individuals.

As that happens, I think what we’re all kind of stating is it’s incredibly valuable at the

earliest stages to align yourself with a person that knows your business or your market, right?

And that’s worth some amount of dilution.

It’s almost like getting a quasi co-founder, right?

So in the seed and the series A, but I think so that’s one really important point of what’s

happening in the market.

The second thing that I think we’re all saying is why are we diluting ourselves to grow in

these middle rounds?

If you don’t have to.

It’s unnecessary and there should be really clever ways of non-dilutively financing yourself.

And as the market becomes more and more sophisticated, there will be more companies

beyond Pipe and ClearBank to be clear.

But the point is that every kind of company that has product market fit should be able

to finance themselves non-dilutively in the B all the way to the D and the E.

And then the third thing, which is sort of what Friedberg says is this last bookend is

then you have sort of the path to going public.

And this is where the SPAC makes a ton of sense because you have a very certain cost of capital.

You can now architect a cap table where the founder remains in control,

where they and the employees are still more than 50%.

And you pull in the time of the IPO.

Why is that important?

Typically today, these companies were taking 12 plus years to go public.

Now with SPACs, they’ve come back in and they’re closer to seven and eight years.

The reason is back to that argument of like, if you want to be a winner take most outcome,

the most important thing you need at scale is money.

And the way that you get money is by opening the kimono on your finances and showing people

who have lots of money why they should give it to you and not something else.

And so by going public in year six, seven and eight,

that’s where you pull in the billions of dollars so you can dominate.

What we’re seeing is massive competition in the financing of massively competitive

startup scenes.

In other words, the entrepreneurial ecosystem has never been this vibrant.

And I want to point out one thing that the SEC has done that has is going to change

things dramatically, I believe, when syndicates first came out,

everybody said they were stupid, nobody would ever do it.

First one we ever did famously was calm calm, we put in $328,000 became worth over 100 million.

We’re on track this year to do five deals a month 60 deals.

And we’ll put 50 million to work this year at the

Think about that my fund is 44 million.

That’s over three years.

So now the syndicates gotten so big that we syndicate.

Well, exactly.

So I’m going to tell my LP is the next time around.

Let’s have a discussion about this.

But anyway, I want to point out what happened this week, is equity crowdfunding.

This means civilians can invest.

There used to be a cap on an equity crowdfunding of $1 million every year.

And there’s a lot of auditing and financial review you have to do.

And you pay 6% to whoever raised the money.

But it’s it’s there is no sponsor involved in this.

So as an investor, you don’t get me as a lead or Chamath as your sponsor or sacks on your cap table.

But you can go on to Republic now, which has 100,000

investors on it.

And gumroad, which is doing $10 million a year just raised 5 million in one day.

Sahil, who was also running a rolling fund with angel list.

And he has 8656 investors, which means people are putting in under $1,000 each.


And it’s capped at 5 million now.

Then Arlen Hamilton, who runs backstage capital did a very non traditional I’ll say,

raise she’s not raising for her fund.

She sold 10% ownership was in the process of selling 10% ownership

in her venture capital fund startup studio at a $50 million valuation.

She’s selling 10% of it.

If you buy shares in that you don’t get carry but you get 10% of her carry and management fees


So it’d be like buying 10% of craft or whatever.

The point is, you the VCs get boxed out of this.

And this imagine if Airbnb or Uber decided, fuck it, we’re going to let our drivers buy

shares through this.

And they said, we’re starting this crowdfunding for 5 million.

And they did it every year because you can do the 5 million every single year.

So every year you just allow folks who are in your stakeholder pool,

you email them and then they buy in.

It’s just absolutely extraordinary.

Can you explain the Arlen thing?

So she’s sorry, she sold 10%.

It’s a little complicated if you page down to the future earnings.


So if you go to the flow of funds, and that link I sent slash backstage,

she took all of her different funds and said, you can buy 10%.

For $5 million, you own 10% of essentially Sequoia Capital, or Y Combinator, whatever

you want to refer to her, you know, company as her holding company.

Then every time she gets management fees, every time she has distributions from her carry,

she’s going to give 10% of that to these folks forever.

I don’t know if that’s a great idea.

But it’s a new idea.

And I don’t know if the investors in that are going to get a massive return or they’re

doing it because they want to support the cause.

That’s incredible.

My gosh.

It’s so weird.

So disruptive.

It’s so disruptive.


It’s incredible.

Well, because it lets anybody really spin up a new venture firm, basically, because

there are some startup costs of spinning up a new venture.

Remember, she’s been doing this for 10 years and really has gotten, I will have to say,

not a lot of traction, you know, from the classic LPs of the world.

But now, just like we saw with GameStop, just like we see with Bitcoin, just like we see

with NFTs, and Robinhood day traders, there are new entrants here.

And I think there’s going to be a world where I will be able to fire up a syndicate and

say, I would like to raise 10 million, but I’m limiting it to $1,000 per person and 10,000

people invest, or I’m limiting it to $500.

So instead of, you know, going away for the weekend, or going to Vegas and blowing $1,000,

somebody could say, you know what, I’ll go to Vegas and blow 500, but I’m gonna put 500

in the next startup I see.

And this is a democratization that could change everything and make America so much more

competitive with what we’re seeing in China with Jack Ma disappearing and all of their

I’ve said this before, like, like, what’s what’s crazy is like, if you talk about like

systemic inequality and poverty, it’s like, the government loves to give poor people casinos,

sports betting and lottery tickets.


But the idea that they could invest $100 into a startup is illegal, even though startups

generate 15% of your caker.

So even if what you did was you generate you invested in the market beta of startups,

let’s just say that degrades, it would still probably be close to 10%.

And so the markets, yeah, you’d be you’d be at the S&P returns, you know, over many, many

years, 8%.

So I mean, 25% better, it’s it would be incredible.

But with, by the way, 25% better Chamath with the outside chance of hitting a grand slam.

And that’s why I love this.

All right.

So do we want to wrap here?

We have any closing thoughts?

Well, I just think it’s like, if you think of like that thing of like, all the money

flows changing.

The other thing is like, all the people are changing.

And then what SAC said before, it’s much, much easier because the technologies are changing.

You put these three things in a soup, and it just seems like our best days are ahead of us.

I think it’s going to be amazing for entrepreneurship.

All the answers are out there.

If you want to start a company, all the skills are freely available to you.

You can learn anything online.

I think the message I really want people to understand is, you know,

you may you may believe that the world is filled with inequality and racism, and bad actors,

and you would be right.

But what’s also right is that every skill can be learned.

Capital is available now more than ever.

And there is a clear path for you.

If you just stop watching television and learn to be a UX designer, a sales executive, a

marketing or growth executive or a developer, you can change the world and change your life

and be really fucking rich.

Don’t buy into this victim mentality.

It’s complete utter nonsense that crazy lefties are saying everybody’s stupid and nobody can


And I got a bag of red pills here, and I have been pounding them.

The world is a giant opportunity for all of you.

Go get it.

I think it’s time to announce, Friedberg and I would like to announce that we’ve started

a combination incubator and early stage venture firm.

We call it punch draft.

And it’s play on the words launch and craft.

I think the punch is the punch is more just a

when we’re going to launch our first syndicate.

We got to get a deal here.

Somebody’s got to find I just I never get the phone calls.

You guys are doing deals left and right.

Jason, Jason, you need to assign somebody to figure this the fuck out.

Because I think there’s people out there.

There are there are there are folks listening to this podcast who have great businesses.

What we should commit to them is we will help you.

Be the least diluted, and we will try to share the beak wedding amongst all the other folks

listening to this.

So if you have a great company and you’re thinking of raising capital, come to the one

of the four of us, and we will hand roll a solution for you.


OK, let’s just do it.

It’s like that doesn’t have to be systematic.

Go to wet your beak.

OK, hand roll, hand roll.

We will hand roll a solution that will allow the four of us plus everybody else in the

syndicate to invest.

And then we will help you non dilutively grow your business for as long as possible and

then take it public.

OK, I am setting up wet your beak dot com, which is currently redirecting to the all

in podcast.

It’s going to be a type form and the type form is going to let you I will dilute your

business, but the rest of you guys can do it.

Anyway, go to wet your beak dot com and fill out the form.

Tell us a little bit about your business and it will go to all four besties in the


We’ll share it.

Wet your beak is the new database.

I bought the domain wet your beak dot com from one of the.

Yes, you just said it now.

This is the 10th time you’ve said it.

I get it.

Well, collectively, we own it.

This podcast is rapidly turning into a commercial for.

I think we have good information.

Now, this is this is Jake’s attempt to divert and steal my deal flow.

Yeah, what are you talking about?

We’re partners.

You’re a fucking.

We’re partners now?

We are.

Who did I just bring six, seven companies to the other day?

Craft ventures dot com.

Do not.

That’s the website.

That’s the website.

All right.

Yeah, OK.

Don’t email me.

Give me a break, man.

Come on, man.


How many deals are we in?

Back at you.

All right, listen, we love all of the audience and we love our besties.

Love you.

Bestie Chamath.

Love you guys.

Love you.

I gotcha.

Love you, sexy poo.

When are we playing cards?

Come on.

Let’s play cards.

Let’s play Monday.

Let’s Monday.



Sending the invitation.

All right, everybody.

It’s another all in podcast.

If you want to rate and subscribe or do anything like that.


Why not?

And shout out Young Spielberg.

Thank you for making all of our great tracks.

Do a search for Young.





Spielberg in your in Spotify.

Buy his songs.

Like his songs.

And he’s the greatest.

If you want series A funding or seed funding, David Sacks.

If you want to SPAC, Chamath.

And if you want to fold some proteins and.




You want to do some cubits.

Email Friedberg.

Somebody told me that the quality of the show.

He calls it the Friedberg index.

If Friedberg talks a lot, it’s a great episode.

When Friedberg demurs and doesn’t talk a lot, it’s a shit episode.

Say it.

Say the word again.

Say the.



It’s French for sleep.

It means you took a nap.

You’re just so French for sleep.

You’re just such a heathen.

Day more.

More as in more day.

Day as in sleep.

Day more.

You could say demur.

Yeah, he demurred.

Okay, everybody.

We’ll see you next time on The Olive Podcast.

Love you guys.

Love you, Westies.

We are a beef.