Now is the Time for the App Layer | OpenAI & Anthropic Won't Win the App Layer | Mike Mignano, USV

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We have never handed over so much of ourselves to a technology before than we're about to do with agents. As a startup, you need every advantage you can get right now. Today, I'm thrilled to welcome Mike Mignano, who is the newest general partner at USV, to the show. [SPEAKER_01] If I were the CEO of a startup right now, I would actually still be pounding the table to maximize token spend. We like to bet on businesses that literally obliterate markets and existing business models. He's also one of the early investors in Suno and Granola in his prior days. He's a former founder, having sold his business, anchored to Spotify many years ago.

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[SPEAKER_01] This era of building AI products is in many ways about being first and about moving really, really fast. I think traditional media, in many respects, is dead.

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[SPEAKER_00] Ready to go?

SPEAKER_00

Mike, dude, I am so looking forward to this. We first did our show when you were co-founder of Anchor. [SPEAKER_01] Correct. 10 years ago. 10 years ago. I looked it up. [SPEAKER_01] I was underage. And I remember Anchor was like the hottest thing in New York and in startups at the time. [SPEAKER_01] I was legit 18, 19. And I was absolutely shitting myself before our show because you were the—

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[SPEAKER_00] Really? Yeah, you were the it boy of venture at the time.

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For a minute.

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[SPEAKER_01] Like five minutes. Yeah. Maybe most. Well, now you get 20 seconds. So I would appreciate it.

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Dude, I want to start actually with something that I ask a lot of great founders. But given your founding roots, I want to ask it of you. It's, are you motivated more by the fear of failure or by the thrill of winning? I think both to some extent. I think the fear of failure is very, very, very important. I actually strongly believe that great, great things, great companies, great products, great people come from constraints. And I think that failure is the ultimate form of a constraint.

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[SPEAKER_00] You know, you talked about Anchor. Somebody just asked me the other day, they said, at what point in your life did you do your best work? And I thought about it. And the honest answer to that question was, I believe I did my best work when we were three months out of cash. When we were about to run out of money and when we were about to fail is when we did our best work. It's so clarifying to know that you're going to fail unless you turn the thing around. And so I think failure can be an incredible motivator. But I also think that you have to have an insanely ambitious mission that you're trying to accomplish, right? You want to win. You have this hunger to achieve something really hard and really impossible sounding. So I actually think you need to hold both things in your head to be successful. And I try to do that.

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[SPEAKER_00] We were talking before about insights that we had years ago. Years ago with Anchor, you wanted a very natural conversational style record and let people listen in. And I was always, nope, we want manufactured. You were doing clips way before clips were cool. We were doing clips. I was absolutely into the airbrushing of audio as we do today. And we disagreed on that.

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Yep.

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What are your thoughts on that now?

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There's so much content and the tools have gotten so much better that out of the box, you can have a really, really decently sounding or looking podcast with almost no effort. And so if you want to break out, you actually have to go above that. The baseline has to be excellence. The baseline has to be incredible editing. The baseline has to be a phrase that you used back, I remember 10 years ago, insights per minute. And so now I'm actually a huge fan of insanely high production value when it comes to podcasts, when it comes to YouTube videos. You know, we were talking a little bit before you asked me about some of the content I've been producing. And we've tried to do something very, very different where we actually break out of a studio and we bring in multiple cameras and multiple mics. And we try to do something very, very, very high production value because I think that's the only way to stand out. So anyway, I think you were right. It took me 10 years to agree with you.

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Listen, I was totally fishing for that. I was right. I do think insights per minute is important. I also think time to value is very important. [SPEAKER_00] Yeah. People ask the most stupid question, which is, tell me where did you grow up? Very little is often learned in the where did you grow up? Where's your version of that question? Oh, I want to go straight to the, are you motivated more by fear of—straight away there? I have someone on a hook. You have to create hooks in content pretty early.

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[SPEAKER_00] I also think very much like venture, you have to be either really big or really small in content. You have to be very natural—a teenager putting their phone up on the side and hitting record. Or you are Logan Paul or Mr. Beast or like us of Venture Studios all over London. It's much bigger. The mid tier firm doing it from that conference room office doesn't work. Yeah. Yeah. You got to be on the extremes. I totally agree with you.

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So speaking of being on the extremes and constraints, you know, Lightspeed is a cash constrained world to be in. It's tough over at Lightspeed. And you made the move to the extremely well-funded USV. I'm obviously joking. We're going from the very large to the very small constrained USV in comparison. [SPEAKER_00] Why did you decide to make that move, dude? I decided to go to USV because I am from New York. I've always been in or around New York. And as a builder, when I was building Anchor in New York 10 years ago, I got to meet USV.

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[SPEAKER_01] I totally agree with you.

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So speaking of being on the extremes and constraints, light speed is a cash constrained world to be in. [SPEAKER_00] It's tough over at light speed. [SPEAKER_00] And you made the move to the extremely well-funded USV. [SPEAKER_00] I'm obviously joking. We're going from the very large to the very small constrained USV in comparison. Why did you decide to make that move, dude? I decided to go to USV because I am from New York.

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[SPEAKER_01] I've always been in or around New York. [SPEAKER_01] And as a builder, when I was building Anchor in New York 10 years ago, I got to meet USV. [SPEAKER_01] And I had an incredible experience, despite them passing, started a very, very long friendship. I ultimately became an LP in the funds. And I just really always appreciated their ability and their willingness to be really opinionated and to be very thesis driven, even at times in which the market said it made sense to be very consensus driven. And by the way, there have been times in the market, including recently, where being consensus driven has been extremely valuable and extremely lucrative as a fund.

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But the way I like to work, the way I like to build, the way I like to bet is by being thesis driven. And I recognize that being thesis driven can also be super risky, right? If you bet on a thesis and you're wrong, you miss and you fail. Well, the trouble is that thesis driven can also be conventional. And so what I'm actually worried about is that what if the winners of venture and what if venture is just from this point out consensus driven? So I think that we are coming out of a time in the market where we have undergone a massive infrastructure build out in AI.

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[SPEAKER_01] We've had these new companies, these companies building these brand new technologies, which have required vast amounts of capital to build out the infrastructure. [SPEAKER_01] And obviously I'm talking about the labs. I'm talking about OpenAI, Anthropic, XAI, SpaceX, et cetera. And those required a lot of capital and they produced magical technology that has generated billions. We're about to see trillions of dollars in value. But now that infrastructure is built. And it reminds me a lot of the early days of the Internet when we built out fiber and we built out broadband. And then we had these new technologies to play with.

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And the Internet came along and an application layer came along and took advantage of that new technology.

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[SPEAKER_00] To me, it feels like we are back in that mode right now where we've got this infrastructure and now it's time for the applications to be built. [SPEAKER_00] And I think there's going to be so many applications, so much software that you're not really going to be able to make a bet unless you know what you're looking for. [SPEAKER_00] And I think that's what USV has always been great at, knowing what they're looking for and placing the bet when they see it. [SPEAKER_00] Brendan McCall said the other day, we will see much greater value accrue in the next 24 months at the infrastructure layer than we will at the application layer.

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Agree or disagree?

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[SPEAKER_00] I think there is still value to be created and accrued to the infrastructure layer. [SPEAKER_00] We're not done. The build out's not done. But I also think now that we've got enough new toys at the technology that we will see massive value creation in the application layer as well. [SPEAKER_00] Do you think the future of AI is always on?

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Sam Altman is suggesting so more and more in his verbiage. God, it makes me excited for NVIDIA if the future of AI is always on. Do you agree with that? I do think that we're entering a world in which context is increasingly valuable for the labs and also for the application layer, right? [SPEAKER_01] And so I think we will see products and businesses increasingly try to push us further and further along the edge to an always on world. [SPEAKER_01] I mean, I can remember 10 years ago when I got an Alexa in my home and thinking to myself, wait a minute, this is always listening for the wake word? For the wake word.

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And now we've, I think to your point, we've moved past that where, say you're in a meeting, you're having a meeting, you're in a conference room. I think more often than not, I'm hearing somebody say, hey, I'm recording this, right? So I think we are moving more and more towards that world for better or worse. Do you think the multi-stage funds deliver an amazing pre-seed and seed product? Because I, okay, so I say this, I think you'll probably also, and there's no problem with this, but I think you're a little more protective of your brand than me. I don't worry about upsetting people. [SPEAKER_01] The worst place to be is a 50 to a hundred million dollar seed fund.

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[SPEAKER_01] You will get crushed by the large funds who are able to write large checks and lead rounds, but you're also not small enough to be collaborative. [SPEAKER_01] Very difficult middle ground to be in, I think.

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Do you agree? I think the best funds in the world at doing seed are really, really good about building their networks and meeting amazing people.

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[SPEAKER_01] I think you've been doing a good job recently at empowering a new class of entrepreneurs here in Europe and in London with very, very early stage seed checks.

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So I think you have to build a great network. [SPEAKER_00] I also think to do seed well, you have to put your ideas out there into the world. [SPEAKER_00] You have to show the market what you're looking for. [SPEAKER_00] You have to be willing to take a stand and take a position and say, you know, I just put out a post yesterday about the Rebel Alliance and saying, hey, at USV, we're really interested in the Rebel Alliance, this new universe of open weight models and open source harnesses and distributed compute and agents, right? [SPEAKER_00] Human aligned agents.

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[SPEAKER_00] And I think when you put things out into the world, you're sending up a bat signal that's telling these early stage founders that maybe haven't gone out into the world yet with a product.

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Oh, this is the VC or this is the person or this is the team I should be talking to.

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[SPEAKER_00] So I think you need a great network. [SPEAKER_00] I think you need to ship your ideas. [SPEAKER_00] And I think you need to be willing to take bets on people, which, again, I think you've done a good job of with your program. [SPEAKER_00] Can I ask you on the kind of shipping ideas? [SPEAKER_00] and distributed compute and agents, right? [SPEAKER_00] Human aligned agents. [SPEAKER_00] And I think when you put things out into the world, you're sending up a bat signal that's telling these early stage founders that maybe haven't gone out into the world yet with a product. Oh, this is the VC or this is the person or this is the team I should be talking to.

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[SPEAKER_00] So I think you need a great network. [SPEAKER_00] I think you need to ship your ideas. [SPEAKER_00] And I think you need to be willing to take bets on people, which, again, I think you've done a good job of with your program. [SPEAKER_00] Can I ask you on the shipping ideas? And this is why I love asking advice, Bunny. What if the ideas aren't fully formed? What if I'm just wrong? And then I get a deluge of companies. And actually, the thesis wasn't what I thought it would be.

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I think that's totally OK. I think much like building a startup or building a product, I think if you're investing, you also have to be willing to put yourself out there and take a risk and place a bet. Now, listen, you can hedge that bet a little bit. You can place a counter position bet and something else maybe to offset the risk of that. [SPEAKER_00] But I think you have to be willing to put yourself out there if you want to succeed at anything in technology, whether it's a startup or a venture capitalist.

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Open weights, open harnesses, open models. Ding, ding, ding, ding. We're going to do a prediction round. Fun.

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[SPEAKER_00] I told you we had this truth or donate round. Yeah. This is a new prediction round. The model landscape in five years time, what does that mature market look like in terms of composition? The players, their weightings, what does that look like? [SPEAKER_00] You know, one future is that the labs, especially the ones that are starting to approach something that feels like super intelligence. Once they reach it, if they reach it, we will have some form of recursive self-improvement such that we hit this exponential growth of intelligence. And the thinking goes that whoever gets there first will run away with it. [SPEAKER_00] Right.

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[SPEAKER_00] Once you reach recursive self-improvement, you're gone.

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No one can catch up. And I think that is, yeah, that's not necessarily the future that I am hoping for. For everyone who doesn't know, what is recursive self-improvement? This is self-improving AI, right? This is super intelligent AI that can do its own AI research, right? So once you have it, once you deploy it, it can just continually improve itself on the exponential forever until it plateaus, until it self-limits in some way.

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And by the way, we don't know what that self-limiting factor may be. It may be that for some reason, these architectures, the transformer architecture, doesn't scale past a certain point. We don't know if that's going to happen. It could be that the model needs some amount of data that it can no longer access, right? There's a limit to the amount of data. It may mean that we can't keep up with the hardware infrastructure build that we need to keep recursively self-improving.

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So in the past, in the history of new technology adoption, if you study them, they actually all follow S-curves, right? They have a slow takeoff. Then they have what feels an exponential ramp up. And then they plateau for some reason, as we just discussed. And that's potentially the second future for AI, right? We reach some plateau in terms of intelligence. And I think if that happens, then the technology might start to look somewhat more like a commodity, right? If it plateaus, then we're at a point where all the other labs can catch up and they can all have the same technology. And if they all have the same technology, then we're going to have a lot of competition. We're going to have a lot of competition in terms of price, in terms of product experience, and in terms of the various components that make up the new intelligence stack.

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So if we go on the route one, recursive self-improvement, and it leads to this exponential advancement, is that done by an OpenAI or an Anthropic or a leading model provider today? Or is that done by a recursive or one of the many others going after? I was literally for two hours in shortage yesterday with one. Or is that done by an entirely new company focused on recursive itself? [SPEAKER_01] Yeah, I think it's probably done by one of the labs that already has all these advantages, these vast compute advantages. They already have models that are at the frontier. They have the infrastructure. They have the chip. So I think it's probably done by one of them.

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That said, there are a bunch of amazing researchers working on incredible new architectures that maybe haven't broken through yet, but maybe they can. Maybe they're building something that is better than the transformer, right? There are a number of these labs out there: Thinking Machines, Safe Superintelligence from Ilya and Daniel. I think if I were to bet, I would say the labs that already have the advantages, but that doesn't mean there isn't a new architecture being worked on in a lab somewhere that could leapfrog all of it. Okay.

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Number two is that actually we have less of this exponential and more of a linear style. When you look at that more mature market on the S-curve basis, what does that composition look like in terms of market between open and closed and Anthropic and OpenAI? I think in that world, enterprises and individuals are probably optimizing for a couple of things. [SPEAKER_01] I think they're probably optimizing for cost, right? They're starting to think about the trade-offs between intelligence and spend and how they can optimize their token spend. [SPEAKER_01] So what does that mean?

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[SPEAKER_00] It probably means leveraging things like open weight and open source models. It probably means leaning into things like the routing layer to optimize the token usage towards the model that maybe gives you the most bang for your buck rather than always just token maxing and picking the most powerful model. [SPEAKER_00] I think the other thing it looks like is choosing tools and products and products and tools that are maybe a little more human aligned. [SPEAKER_00] Can you help me? What the fuck is a harness? Seriously, I feel so bad.

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[SPEAKER_01] can optimize their token spend. [SPEAKER_01] So what does that mean? It probably means leveraging things like open weight and open source models. It probably means leaning into things like the routing layer to optimize the token usage towards the model that maybe gives you the most bang for your buck rather than always just token maxing and picking the most powerful model. I think the other thing it looks like is choosing tools and products and harnesses that are maybe a little more human aligned. Can you help me? What the fuck is a harness? Seriously, I feel so bad. No, I know.

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Do you know, on X, I really want to do grok what is a harness, but I know everyone will be like, oh, harness. [SPEAKER_01] I think of the harness as the application that tightly, tightly couples with the model. So in the case of Claude, it's like the Claude desktop app. And I would say specifically Claude Code and Claude Cowork that are having this loop, this flywheel of product and model engagement. You know, some other harnesses that I think people are pretty excited about are things like Hermes. I consider Hermes a harness that takes over your Mac mini. I don't know if you've set it up yet. But Pi from Arendelle is another great harness. European company.

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Someone legit called a harness after one of the greatest fashion brands. What's that? Hermes is a fashion brand.

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[SPEAKER_00] Oh, right. [SPEAKER_00] Well, isn't that Hermes? Well, it's spelled the same, dude.

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[SPEAKER_01] Good point. [SPEAKER_01] So anyway, I think having products, agents, harnesses that are human aligned and aligned with your own goals and incentives is going to be really important. I think people are going to be more self-conscious about the incentives of the model they're using. Obviously, the incentives of the models that come out of the big labs are to make the labs' models smarter, better, faster.

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And you might think to yourself, hey, if I'm outsourcing all of my agency and all of my personal information and these goals and my credit cards and all these things to an agent, I want that thing to work for me. I want that thing to be completely aligned with my incentives.

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[SPEAKER_00] You know, I published a thing a few weeks ago on X called Who Is Your Agent Working For? And that was the big idea we were trying to get across with that. [SPEAKER_00] And I think in the future, as you become more comfortable handing over the keys to an agent, you're going to want to know that it's working for you. [SPEAKER_00] So I think that's what that second future looks like. [SPEAKER_00] I have to say, I think people will get incredibly comfortable handing over the keys in the same way that we got incredibly comfortable putting our credit cards online using Apple Pay, finding our husband or wife online.

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And I think that will be default in five years. I think there's a chance you're right. I don't think anyone gives a shit about privacy other than hardcore technologists. And I know that's blunt. [SPEAKER_01] I'm going to get killed. [SPEAKER_01] No, no, no, you're not. I think there's a good chance you're right. [SPEAKER_01] You know, if we're just thinking in terms of bets and probabilities, I think the history of the Internet and personal computing suggests that you are right, Harry. [SPEAKER_01] But two things. [SPEAKER_01] First is I think we have never handed over so much of ourselves to a technology before than we're about to do with agents. Yes, you're right.

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We browse the web.

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[SPEAKER_00] We used Chrome. [SPEAKER_00] We used. [SPEAKER_00] But it didn't do shit for us. [SPEAKER_00] It didn't do shit for us. [SPEAKER_00] Yeah. [SPEAKER_00] Right. [SPEAKER_00] We still got to control it, right? [SPEAKER_00] Yes, maybe we let these companies learn about our interests and the things we care about. [SPEAKER_00] But it wasn't out buying stuff for us, right? [SPEAKER_00] It wasn't out sending very personal messages to family members and loved ones.

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It wasn't a second self, right? It wasn't us. I think now we're going to be doing stuff like that. And it might just make us think more about the incentives of the model that are doing those things for us. That's number one. Number two, I'm not sure that every model and every agent needs to be superhuman aligned. I'm not sure every person needs to care about it. I just think enough people have to care about it such that one player or a few players keep the others in check, right? I think we need market forces where a couple of good actors keep the rest of the other actors in check. So I think it's possible now. Is it going to happen? I don't know. History says it won't.

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But I think it's possible. Do you think Dario's had a massive own goal in terms of marketing and messaging? He's been saying about labor displacement for years. Oh, everyone's going to be unemployed. And telling your customers they're going to be unemployed is always a bold statement. What I see in Anthropic is an extremely mission-driven company. [SPEAKER_01] And I believe that mission-driven companies can be very, very successful.

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And Anthropic, love them or hate them, there's no doubt they've been extremely successful. I think at the time of us recording this, they're the most valuable privately held company in the world. You know, I think core to whether they continue the exponential revenue growth that they've had is percent of spend in terms of developer salaries on tokens. [SPEAKER_00] And Mark Benioff said that he spent $300 million on Anthropic, specifically for the dev team, which equates to 3.8% of dev salaries spent on tokens. [SPEAKER_00] Now, if that goes to 20%, Anthropic's grossly undervalued, that exponential revenue will continue.

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And well done, everyone who's invested in all their employees. Great. [SPEAKER_01] If it goes to 100%, holy shit, this is just so much more big, larger than we ever thought it could be. [SPEAKER_01] But if it stays, or if we see migration to open models, it's a very different game. [SPEAKER_01] I think it's a risk. [SPEAKER_01] Look, I think there are two schools of thought playing out right now with regards to token spend.

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[SPEAKER_01] I think one school of thought which we're seeing, and I think when I really think about it probably applies more to the incumbents and the big companies, the Salesforces of the world rather than the startups, is that if every employee is just spending crazy on tokens, the fundamentals of these businesses are going to be in trouble.

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[SPEAKER_00] Great. If it goes to 100%, holy shit, this is just so much more big, larger than we ever thought it could be. But if it stays, or if we see migration to open models, it's a very different game. I think it's a risk. Look, I think there are two schools of thought playing out right now with regards to token spend.

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[SPEAKER_01] I think one school of thought which we're seeing, and I think when I really think about it probably applies more to the incumbents and the big companies, the sales forces of the world rather than the startups,

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is that if every employee is just spending on tokens, the fundamentals of these businesses are going to be in trouble. They're just too big, right? [SPEAKER_00] There's too many employees at a Salesforce or, I don't know, a Microsoft, such that every employee can just have an unlimited token spend budget. [SPEAKER_00] So I think we're going to see a lot of those companies start to constrain their spends.

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And we've seen mentions of things on X recently. We've seen Matter, Uber, Microsoft in the last week. I think if you're a startup, the calculation probably looks a little bit different. Your organization is smaller, right? So you're not going to have a situation where you have 5,000, 10,000, 50,000 employees just spending out of control. [SPEAKER_01] You can more tightly control the spend. [SPEAKER_01] But also, I think as a startup, you need every advantage you can get right now. And so if I were the CEO of a startup right now, I would actually still be pounding the table to maximize token spend on the right things, right?

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Definitely with coding, maybe not with other things. For simple tasks like summarization or operations type work, I'd probably be leveraging Sonnet or something. But if I'm at a startup and I'm coding, I want to be using the frontier. I want every advantage I can get against Salesforce. So if you are the best dev, are you going to go to a big incumbent who are going to give you a budget and really constrain your abilities in terms of model usage? Or are you going to go to a startup where fundamentally they say, hey, it's a free-for-all, be your best self? I think you're going to go to a startup, especially the startups right now that are mission-driven.

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Which, by the way, I don't know that we've really been in that mode for the past couple of years. Yes, Anthropik's been mission-driven, but there's so much money and capital sloshing around the valley in this ecosystem. [SPEAKER_01] I think a lot of companies haven't needed to be mission-driven. [SPEAKER_01] I think now they will, and it's going to work to their favor.

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Do you not think we enter a world now where Fable will come back in some rejuvenated form one way or another, where Fable comes back and newer and better models come back, and you just have the 100x engineer, and you pay for that token spend, which is enormous, with the replacement of the 10 other mid-engineers? I do think engineering organizations are going to evolve. I don't know exactly what it looks yet, but I think you will increasingly have probably somewhat smaller teams of higher caliber and higher quality engineers, because I think a lot of the lower-level tasks increasingly can be delegated away to agents.

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In terms of the open ecosystem, when we look at it today, what percent of enterprise workflows do you think can be done with open? 80% of non-coding tasks in the enterprise can be done with models that are not at the frontier. [SPEAKER_01] I think if you're coding, you probably want to be leveraging frontier models, but I think things like summarization or the generation of docs and briefs and things, I don't think you need to be at the frontier, and so you probably can leverage open-source models. I think a lot of the open-source models we're seeing are catching up faster than they were previously. So I don't know that you need to be at the frontier if you're not coding.

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[SPEAKER_01] China has the best open-source models. It's unbelievable to see the rate and the evolution of that open-source system. Is that concerning, do you think? I think, look, I think startups and teams go where the incentives are. I think as we shift to a world in which this rebel alliance might actually have a fighting chance, we're going to see a lot of smart teams going more and more towards open. [SPEAKER_01] I'm really intrigued. [SPEAKER_01] You said about the routing layer. [SPEAKER_01] Do you fundamentally think there will be $10 to $50 billion companies built in the routing layer?

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Or do you think, candidly, your inference providers like Fireworks or Base 10 eat into that?

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[SPEAKER_00] Or, candidly, if you want to go a step above that, you've got Nebius who sits on top. When I had the founder of Nebius on, he said, we need – I'm not going to put it on his accent because I'll sound like a Bond villain and then he'll kill me. But you need to eat all of the stack. I do think routing is interesting and important right now, right? I think, again, as enterprises are trying to optimize their token spend, they want to make sure that the model they're using is the right model for the job.

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[SPEAKER_01] Not only in terms of its capability and what it can get done, but its cost. [SPEAKER_01] And so you're going to have companies that are singularly focused on this, companies like Open Router out of New York, which is doing some really interesting work. [SPEAKER_01] And then you're also going to have companies that are leveraging other parts of the stack for their products that build their own routing layer as an opportunity to monetize.

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Actually, we've talked to a number of companies building at various different levels of the stack that when you talk to them about their business model, they talk about building a routing layer and monetizing the routing layer. So I think it's a really interesting area that has a lot of opportunity and a lot of different companies are going to go after it because they see the potential. How do you monetize a routing layer without becoming just a commodity pipe? It's a good question. I think a lot of companies right now are thinking about charging a small margin on top of it. And I think to your point, that might not be a great business model.

SPEAKER_00

I put out a piece on X about this a few weeks ago and a number of people chimed in with some of their ideas. [SPEAKER_01] And one interesting idea I heard was this notion of almost a bounty model at the routing layer where the routing layer gets rewarded for choosing the right model. Right. So if you choose the most efficient model or the best model for a certain task, that's when they collect a fee. And I thought that was an interesting idea.

SPEAKER_01

[SPEAKER_00] Haven't necessarily seen it built out yet, but I thought it was a pretty interesting idea. [SPEAKER_00] I think it's hard to see that $50 billion company built in routing alone, I have to say. [SPEAKER_00] Maybe. On the other hand, we've seen time and time again in the enterprise, in infrastructure specifically, that these infrastructure companies, they become deeply embedded in the developer workflows and in the developer ecosystems. [SPEAKER_00] And you just can't rip them out because it becomes the gold standard.

SPEAKER_00

So maybe somebody will build that routing layer that every developer adopts and never wants to remove. Would you say it's unfair of me to say that USV missed the model game? And I thought that was an interesting idea. Haven't necessarily seen it built out yet, but I thought it was a pretty interesting idea. I think it's hard to see that $50 billion company built in routing alone, I have to say. Maybe. On the other hand, we've seen time and time again in the enterprise, in infrastructure specifically, that these infrastructure companies, they become deeply embedded in the developer workflows and in the developer ecosystems.

SPEAKER_00

And you just can't rip them out because it just becomes the gold standard. So maybe somebody will build that routing layer that every developer adopts and never wants to remove. Would you say it's unfair of me to say that USV missed the model game? I think USV was playing a different game. And that's actually been the history of USV.

SPEAKER_01

[SPEAKER_00] Is the game not unbelievable returns in generational defining companies? [SPEAKER_00] So USV, again, I think has never been afraid to take a position.

SPEAKER_00

And I think USV maybe did not invest in any of the big model layer companies. But what USV now has been doing for a number of years, and I'm a big believer that we haven't seen the full circle of this narrative play out, is they've been betting on energy. And they've been betting on energy since 2021. And the idea has been for a long time now that no matter what model wins, if you believe in AI and if you believe in intelligence, there's going to be an energy layer underneath that is going to be needed to power these things. And over the time since 2021, we've learned that we only need even more energy than we thought.

SPEAKER_00

And we need more portability of energy than we thought. And so energy is a big theme at USV. It was starting in 2021. And it still is to this day in 2026. Did I say 2001? I meant 2021. How do you think about investing in energy given the capex intensive nature of it? You know, we're investing in a company called Fuse Energy, which I think is incredible. I'm so happy to be.

SPEAKER_01

[SPEAKER_00] But it's a capex intensive business in terms of the energy space. [SPEAKER_00] It is. [SPEAKER_00] But I think there's also a lot of innovation happening.

SPEAKER_00

And where there's innovation, you can find early teams that are doing science experiments before anyone else is thinking about them. [SPEAKER_01] USV a few years ago invested in a great company called Radiant, which is building small nuclear reactors that literally come off of a factory line. [SPEAKER_01] You know, and it's going to be one of the first companies in the world to test in the dome in the United States for nuclear energy. [SPEAKER_01] And so I think there are a lot of interesting models and ideas happening on the edge of innovation.

SPEAKER_00

[SPEAKER_01] And I think those are the best places to bet as a venture capitalist, because in the earliest days, they're actually not that capital intensive. You know what I love? Boom Supersonic. Crazy. Yeah. Like turbo. Don't get me wrong. We all love Concorde and Blake. I love flying too, dude. [SPEAKER_01] Yeah. [SPEAKER_01] Game on. But there's this massive business in turbines for AI. [SPEAKER_01] Yeah. [SPEAKER_01] What a wonderful world.

SPEAKER_01

We have a bet in a company called Rune. Amazing company.

SPEAKER_00

[SPEAKER_01] Have you heard of Rune?

SPEAKER_01

No. They're building micro data centers that sit directly next to generators, wind farms and things like that to solve the portability issue. [SPEAKER_00] How do you get the energy as close as possible, as quickly as possible to the compute, to the data centers?

SPEAKER_00

And so I think we're on the lookout for things like this that are innovating the model of energy and portability of energy. Isn't this just the joy of capitalism? I met Panthalassa, this company that does data centers at sea. Oh, wow. And it's just fundamentally Adam Smith's invisible hand—the market solves itself. Yeah. In terms of we got an energy crisis and then you get Rune and Panthalassa and Elon building data centers in space. It's crazy. [SPEAKER_01] Awesome. [SPEAKER_01] It's a cool time. [SPEAKER_01] It's a fun time to be investing. [SPEAKER_01] It is.

SPEAKER_00

[SPEAKER_01] And this is why I get really pissed off with a lot of European entrepreneurs who are still building SMB accounting solutions. [SPEAKER_01] Hey, look, I mean, I think that there's an opportunity for automation in the enterprise. Personally, I would much rather build products and companies that obliterate. That's something we talk about at USV all the time. Don't automate. Obliterate. [SPEAKER_01] But hey, some people want to automate. [SPEAKER_01] What does that mean, don't automate? Well, you just talked about automation and you talked to I think you were talking about SaaS in a sense.

SPEAKER_00

I think there have been amazing companies built that automate existing workflows, existing processes. But at USV, we like to bet on businesses that obliterate, that literally obliterate markets and existing business models. And so we actually don't do a lot of enterprise investing for this exact reason. Enterprise investing often requires selling to a middleman, selling to customers or building things that just make existing businesses faster. We want to invest in businesses that literally reinvent the way something is done. [SPEAKER_01] Take Doctronic as an example. Are you familiar with Doctronic? USV led the seed in Doctronic a couple of years ago.

SPEAKER_00

At the time, it seemed like a crazy idea. It was the idea of AI putting a doctor in literally everyone's pocket.

SPEAKER_01

[SPEAKER_00] Now, we could have invested in AI that make medical practices faster or more efficient or help you with insurance claims. [SPEAKER_00] Or we can put doctors in everyone's pocket and totally reinvent the model with AI. [SPEAKER_00] So I think that's what we're talking about when we talk about obliterate, don't automate. [SPEAKER_00] Doctronic, doctor in your pocket.

SPEAKER_00

It reminds me of education. Sorry, I didn't mean that disparaging. It's awesome. Yeah.

SPEAKER_01

[SPEAKER_00] But it reminds me, sorry. [SPEAKER_00] Education reminds me of the same, actually. And do you know who the biggest winners are in both education and in medicine in most cases? Who's that? It's the horizontal players. It's YouTube. [SPEAKER_00] And my worry is, especially with health, ChatGPT's second most used thing.

SPEAKER_00

[SPEAKER_01] Maybe. [SPEAKER_01] Health. [SPEAKER_01] And so my question to that, Tide, is not tied to Doctronic. [SPEAKER_01] It's how do you think about where model providers will go and eat into the application layers and not kill our lunch? [SPEAKER_01] Maybe. Yeah. But it reminds me, sorry. Education reminds me of the same, actually.

And do you know who the biggest winners are in both education and in medicine in most cases? [SPEAKER_01] Who's that? [SPEAKER_01] It's the horizontal players. [SPEAKER_01] It's YouTube. And my worry is, especially with health, ChatGPT's second most used thing. [SPEAKER_01] Maybe. [SPEAKER_01] Health. [SPEAKER_01] And so my question to that is not tied to Doctronic. [SPEAKER_01] How do you think about where model providers will go and eat into the application layers and not kill our lunch? [SPEAKER_01] Maybe. [SPEAKER_01] We just talked about a bridge. [SPEAKER_01] I think you had Shiv on here recently.

SPEAKER_01

A bridge has been working on this problem for close to 10 years now. And it's given them a massive advantage.

SPEAKER_00

[SPEAKER_01] It turns out in highly regulated industries like healthcare, you can't just walk in the door and say, hey, we're going to do healthcare now. [SPEAKER_01] You have to actually build relationships, build partnerships, clear through regulatory hurdles. And that ends up being a form of a moat. And so, USV invested in a bridge, I think, in 2018, right, eight years ago now. And it took that company five, six, seven years to hit this inflection point now where this product is being used by so many doctors in so many different healthcare systems because they were able to clear those hurdles.

SPEAKER_01

[SPEAKER_00] And so, I think we can say that we live in a world where the labs and the hyperscalers can take over any product in any market.

SPEAKER_00

But the reality is that's been the story of technology and innovation since the beginning of time. There are always going to be startups and founders and entrepreneurs that specialize and do the really hard things before anyone else has thought of them that end up prevailing.

SPEAKER_01

[SPEAKER_00] I mean, just take Spotify, which we talked about at the beginning, right?

SPEAKER_00

Spotify went up against a behemoth, classic David and Goliath story. And they could have been killed 50 different ways along the way, but they specialized. And they did the hard thing early and often. And now they're obviously the winner.

SPEAKER_01

[SPEAKER_00] So I hear you that the labs can go into any application layer. [SPEAKER_00] But not only do I think that's not true, I also think it's not really fun. [SPEAKER_00] And what fun can we have as venture capitalists if we don't believe that startups can take down the Goliath?

SPEAKER_00

I'm also not sure if it's as binary, even if they do. You saw Claude and Anthropic dedicate an entire team to design and to go up against Figma.

SPEAKER_01

[SPEAKER_00] Figma is still a business that does multiple billions in revenue and there's still multiple players in the space. [SPEAKER_00] Great product. [SPEAKER_00] Great product. [SPEAKER_00] It's not... [SPEAKER_00] Trusted brand. Trusted. My biggest mistake also, especially on the developer landscape, was I thought that there would be a runaway.

SPEAKER_00

[SPEAKER_01] And of course, Claude has run away and done amazingly well. But Lovable's at 500 million error, Cognition is, Rapplet is, Anthropocodex is crushing. [SPEAKER_01] They've all crushed. [SPEAKER_01] There usually isn't a market winner that takes 100% of the market or 80% of the market. [SPEAKER_01] Usually what you see is that the market winner takes something like 30% of the market, right? [SPEAKER_01] Which means the 70% remaining is totally up for grabs. [SPEAKER_01] And if the market's big enough, that can produce some really large winners.

SPEAKER_01

Can I ask you, do you see different deals at USV to the types you saw at Lightspeed?

SPEAKER_00

[SPEAKER_01] I'm not saying bad or worse. [SPEAKER_01] Do you just see different? I think when going back to what we talked about earlier with Seed, I think if you put yourself out there in the world, you're going to see deals that match those themes and ideas. And not to say I didn't do that at Lightspeed. We did that at Lightspeed as well. [SPEAKER_01] But to the point earlier about being very focused on energy, right? [SPEAKER_01] Or now being very focused on this Rebel Alliance, we're going to see a lot of those companies come to us. [SPEAKER_01] And I think when you're small, you have to pick your spots.

SPEAKER_00

You have to have constraints and focus on a small number of things. And so I think to the extent that we see things different, it's because we focus really, really deeply. And for a period of time, we may only look at a couple of different areas that we have theses on. What are you unsure of right now that is worrying you? To my point earlier, I think a lot of people are concerned by the intrusion from model providers into the application layer. We're investors in Lagora. Anthropic are very openly suggesting they want to come into legal.

SPEAKER_00

I think that's fucking moronic for multiple reasons when you're chasing AGI to be like, ah, we're going to go after your lunch Clifford Chance or Slaughter and May. It doesn't make much sense. [SPEAKER_01] Look, as much as I say that there's always going to be opportunity for startups and that one model or one company can't do everything, of course you still worry about competitive threats. [SPEAKER_01] As you know, I partnered closely with Granola when I was at Lightspeed, Suno as well. [SPEAKER_01] Those are two startups going up against massive, massive incumbents. [SPEAKER_01] Granola in particular, OpenAI launched a directly competitive product, right?

SPEAKER_00

[SPEAKER_01] Notion, a very well-funded startup, launched a directly competitive product. [SPEAKER_01] And so I do worry about that. But I think, again, that's always been the worry when you're building in startups. Is the worry not for Granola just breaking into enterprise, the traditional enterprise? Notion have found it incredibly hard to break into traditional enterprise. These are startup and venture funded products, which is amazing. And you can get to 500 million in revenue. But you need to be 5 billion in revenue.

SPEAKER_00

I think the nice thing about Granola, what it really has going for it, and one of the things that I believe has helped that company in enterprise penetration is being really focused, right?

SPEAKER_01

[SPEAKER_00] They're just doing notes. They're just doing notes. I think there are other companies, startups selling into the enterprise that try to do many different things. But dude, I think you've got to do more.

SPEAKER_00

[SPEAKER_01] Maybe. [SPEAKER_01] But I think you want to get your foot in the door. And I think when you want to get your foot in the door, you want to sell one thing. And once you're in, then you can expand horizontally to different categories. But I think if you come in, expand really, really wide, now you have to convince the enterprise to give up all these different things, right? They're just doing notes. [SPEAKER_01] They're just doing notes.

SPEAKER_01

I think there are other companies, startups selling into the enterprise that try to do many different things. But dude, I think you've got to do more.

SPEAKER_00

[SPEAKER_01] Maybe.

SPEAKER_01

But I think you want to get your foot in the door. [SPEAKER_00] And I think when you want to get your foot in the door, you want to sell one thing. [SPEAKER_00] And once you're in, then you can expand horizontally to different categories. [SPEAKER_00] But I think if you come in, expand it really, really wide, now you have to convince the enterprise to give up all these different things, right? [SPEAKER_00] You've got to give up your Gmail and your Google Docs and your Google Sheets and your calendar, right? And this and that. [SPEAKER_00] Whereas if you're just doing meeting notes, it's like, hey, we're just going to be your second brand for your company, right?

SPEAKER_00

We're not going to do anything else. We're just going to be your second brand. Oh, and by the way, we're the best at it. Do you not worry about the enduring wave of Microsoft and bundling, whether it's Teams that crushes or whether it's co-pilot? That it's shipping these products. Microsoft has built a business on doing 65 to 70 percent products, but with the power of bundling beat the competitors. I do worry about that. Of course. Absolutely.

SPEAKER_01

[SPEAKER_00] We saw this play out with Slack. By the way, Slack is still around. It's still a massively valuable product. But yes. [SPEAKER_00] I love the way we say this. [SPEAKER_00] It's 27 billion.

SPEAKER_00

I'll take it. Yeah. I do worry about it. What I've also learned about AI products and Granola is that context is extremely valuable, right?

SPEAKER_01

[SPEAKER_00] If Granola gets inside of your organization and everyone in the organization starts using it and producing and accumulating all of this amazingly rich and valuable context, that's not something you as an enterprise want to give up. You don't want to give up that context.

SPEAKER_00

[SPEAKER_01] You've built out this incredibly rich history of information that actually helps you work better. [SPEAKER_01] So I think this era of building AI products is in many ways about being first and about moving really, really fast. You know what worries me is the mech of such large outcomes. And again, this all sounds incredibly disparaging. And it's not meant at all because I'm a podcaster. So incredible disclaimer.

SPEAKER_01

[SPEAKER_00] And a VC.

SPEAKER_00

But my point being, when you have a SpaceX at three trillion, Elon Musk made more money overnight than Warren Buffett has done in his entire career. Credit to him. [SPEAKER_01] Credit to him. [SPEAKER_01] Well done. [SPEAKER_01] God bless capitalism. [SPEAKER_01] Amazing entrepreneur. [SPEAKER_01] Amazing entrepreneur. [SPEAKER_01] God bless capitalism. [SPEAKER_01] But my point is when you have the outcome sizes of Anthropic and OpenAI and the trillion dollar companies, the company that does 500 million in ARR. [SPEAKER_01] Tough. [SPEAKER_01] I think it all goes back to what are you optimizing for? [SPEAKER_01] What's your mission? What are your constraints?

SPEAKER_00

[SPEAKER_01] We talked about VC early on before we stepped into the studio here.

SPEAKER_01

USV has always had small funds. It's the game we like to play. And you can be very successful in terms of what you're trying to accomplish as a venture firm with a small fund. [SPEAKER_00] Now, maybe that same model can't work if you have a 10 billion dollar fund.

SPEAKER_00

But we're playing a different game.

SPEAKER_01

[SPEAKER_00] And I think you're playing a different game, too. [SPEAKER_00] I would not do venture without media. [SPEAKER_00] I said to my LPs the other day, two things really shocked them. [SPEAKER_00] I said, you can't do Series A unless you have a 400 million dollar fund today. [SPEAKER_00] Absolutely no chance. [SPEAKER_00] Well, Series A's are expensive now. [SPEAKER_00] They're 100 million post. [SPEAKER_00] They're 80 million post. They're occasionally 150 million post. And so, if you want to write a check into around that size and get decent ownership for your fund, you have to have a slightly bigger fund than you had three years ago.

SPEAKER_01

Are you being more elastic on ownership?

SPEAKER_00

I think it depends on stage. I think at the seed and Series A stage ownership is important. And the reason is the outcomes are bigger right now. You talked about it. And the companies that end up doing really well raise a lot of capital very quickly. And the valuations get very high. [SPEAKER_01] And in those later rounds, it's actually very hard to buy ownership, especially if you're a small fund. And so you have to get that ownership early on. And seed and Series A are the rounds where you can do that.

SPEAKER_00

Now, once a company crosses that chasm, maybe into the Series B or to the Series C, and you can identify them as being market leaders and potential generational companies, then I think it matters less. Then it's just about getting capital into those companies and underwriting it as a cash-on-cash type outcome. Forgetting about percentages, just imagining, if we put $25 million into this, what can the multiple be on that? Is it a 10X? Is it a 100X? Is it a 1,000X? If it's something really big like that, then you don't really need to think about ownership. We just did a deal together. And by the time this comes out, it'll be announced.

SPEAKER_00

I actually got a message from the founder overnight, which is why I'm able to talk about it. Paul at FOMO. Oh, nice.

SPEAKER_01

[SPEAKER_00] Yeah. [SPEAKER_00] And you guys did that round later. Later for us.

SPEAKER_00

[SPEAKER_01] Yeah.

SPEAKER_01

And that was why I asked that question. Yeah. [SPEAKER_00] But you saw the size of market. And for people that don't know, it's the next generation trading app in many respects. I guess you saw that multiple expansion at the entry price you came in at. [SPEAKER_00] That's a perfect example. You know, we saw that where it was. And we said to ourselves, how big can we see this getting?

SPEAKER_00

[SPEAKER_01] We think it can be a lot bigger than it is now. [SPEAKER_01] And so for this one, we're not going to be ownership focused. [SPEAKER_01] We're just going to put a check in. [SPEAKER_01] Yeah.

SPEAKER_01

And that was why I asked that question. Yeah. [SPEAKER_00] But you saw the size of market.

SPEAKER_00

[SPEAKER_01] And for people that don't know, it's the next generation trading app in many respects. [SPEAKER_01] I guess you saw that multiple expansion at the entry price you came in at. That's a perfect example. [SPEAKER_01] We saw that where it was. [SPEAKER_01] And we said to ourselves, how big can we see this getting? [SPEAKER_01] We think it can be a lot bigger than it is now. [SPEAKER_01] And so for this one, we're not going to be ownership focused. [SPEAKER_01] We're just going to put a check in. [SPEAKER_01] We may not be able to bet every round from here out because, again, we have constraints to the size of our funds.

SPEAKER_00

But we think there's enough opportunity and enough upside from here that it's worth it.

SPEAKER_01

[SPEAKER_00] Should you do it if you don't think there's a mega outcome? [SPEAKER_00] I know that sounds strange. [SPEAKER_00] I'm not sure. [SPEAKER_00] For us, for USV at the later stages, if we don't think that there's a gigantic outcome, it probably doesn't make sense for us to bet. [SPEAKER_00] But even should you do it early if it's not a gigantic outcome is my question. [SPEAKER_00] Look, I think in general, you always want to believe that the things you're betting on are playing in large markets with very, very large surface areas. [SPEAKER_00] And we're going to look at every company that way.

SPEAKER_00

But I do think that because our funds are smaller, similar to yours, there's probably more downside protection for us in that model than, say, at a larger fund where you have to multiply billions of dollars. For us, the fund that we're investing out of now, the core fund, it's a $275 million core fund. And so you can multiply that a lot easier than multiplying, say, several billion dollars, especially if you get the same type of ownership that a larger fund is getting. I think it will be the best time ever, though, for the very large platform funds. [SPEAKER_01] And I think they'll be able to deliver venture-like returns because of the expansion and outcome sizes.

SPEAKER_00

Do you think that's true or not? I mean, you look at Thrive. Yeah.

SPEAKER_01

[SPEAKER_00] I mean, their numbers are better than 90% of seed fund numbers on their growth vehicle. [SPEAKER_00] Yeah. When you look at, I mean, they have made a cursor phenomenal. The OpenAI Fund, obviously, are incredible. They are getting venture outcomes on multi-billion dollars.

SPEAKER_00

We think that we are coming out of a period where there has been a massive infrastructure buildout and very, very capital-intense companies. [SPEAKER_01] I think that firms, large firms that were able to invest in those very capital-intensive companies have done phenomenally well. But again, I think we're also now playing in a world where there will be a proliferation of startups and apps at the application layer that are less capital-intensive. [SPEAKER_01] And for those, again, I think you're going to need to know what you're looking for.

SPEAKER_01

And I think you can get in those companies at more modest check sizes.

SPEAKER_00

[SPEAKER_01] Now, I don't think you can have a fund that's in the middle to do that. I think you need to either be on the large end and play the consensus game or be really small and really opinionated and multiply a much smaller fund. Are you elastic on price? You know, candidly, we've lost two deals in the last year. And listen, we got outbid. I don't know if we would have won if we'd paid the same price. I hate people that say that. Yeah. But by two or three X. We bid 150 and another we got outbid by 300 and another we bid 400. [SPEAKER_01] Should I have just paid? [SPEAKER_01] I talked to my partner, Fred Wilson, got a shout out, Fred, one of the goats.

SPEAKER_01

And I asked him a question. I said, what is the biggest lesson you've learned in VC? Actually, I asked him, what are a couple of the biggest lessons?

SPEAKER_00

And one of them was never pass on price. [SPEAKER_01] So Fred says never pass on price. [SPEAKER_01] I think in reality, there's probably some nuance. Just to bring it back to the USV strategy, I think for us, again, if we're investing a little bit later stage, we need to really believe that it's a market winner. And the multiple can be very, very, very high. And in that case, I think we can be a little bit more elastic on price. But I think at the earliest stages, especially when we're investing out of our small funds, I do think there will always be a limit for us on price because otherwise we can't make the fund math work.

SPEAKER_01

[SPEAKER_00] You know why my job is just incredible is because I really am a student of this business. [SPEAKER_00] And by the way, you said shout out to Fred. [SPEAKER_00] I emailed Fred when I was 17 years old and him and Brad Feld both responded to me within 30 minutes.

SPEAKER_00

Wow. That is the testament to giving time to people when, candidly, I had nothing. I told a story on that podcast where when Anchor first launched, I had never met Fred. And the Anchor app accidentally auto-tweeted for Fred. And he has a big follower count on Twitter at the time. [SPEAKER_01] Now it's X, obviously. [SPEAKER_01] And he was not happy about that.

SPEAKER_01

[SPEAKER_00] He started lighting me up on Twitter. This is one of the days, the day after we launched Anchor. [SPEAKER_00] And obviously that was uncomfortable for me as a first-time founder. [SPEAKER_00] But to your point, I cold emailed him right after the fact. [SPEAKER_00] And I apologized and I offered to troubleshoot it with him. [SPEAKER_00] And he responded immediately. [SPEAKER_00] And he was super gracious and forgiving and understanding.

SPEAKER_01

[SPEAKER_00] And so I had a similar experience. [SPEAKER_00] And I think all publicity is good publicity. [SPEAKER_00] Yes, true.

SPEAKER_00

Actually, you probably gained.

SPEAKER_01

[SPEAKER_00] Yeah, we got a lot of publicity from that. [SPEAKER_00] Yeah, you probably do. [SPEAKER_00] Never pass on price. [SPEAKER_00] Where I was going with the student of venture start is I think it actually goes to something that Peter Fenton told me, which is use price as a litmus test for your conviction.

SPEAKER_00

[SPEAKER_01] There you go. [SPEAKER_01] And it's, actually, there are founders like Alan Chang at Fuse or Jack at Airwallis. You could treble the price and I'd still pay it today. [SPEAKER_01] Yeah. [SPEAKER_01] You have founders like this where if you doubled the price, you'd still pay it. [SPEAKER_01] Yeah. [SPEAKER_01] Yeah, absolutely. I can think of some of the best deals I've done. [SPEAKER_01] And even though I'm happy with where the price landed, in hindsight, I'd probably pay double the price if I could go back and do it again. [SPEAKER_01] There you go.

SPEAKER_01

And there are founders like Alan Chang at Fuse or Jack at Airwallis. [SPEAKER_00] You could treble the price and I'd still pay it today. Yeah. You have founders like this where if you doubled the price, you're like, I'd still pay it.

SPEAKER_00

[SPEAKER_01] Yeah. [SPEAKER_01] Yeah, absolutely. I can think of some of the best deals I've done. [SPEAKER_01] And even though I'm happy with where the price landed, in hindsight, I'd probably pay double the price if I could go back and do it again. If I were to ask you, what are your biggest lessons now? [SPEAKER_01] Having been in venture in the same way that you asked Fred, what would you say they are?

SPEAKER_01

You can't project your own ideas on the founder.

SPEAKER_00

Sure, you can offer ideas, of course, if the founder wants. But especially as a former operator, you often think, oh, I know how this business should be built or I know how this product should work. And I think that can really get you into trouble. One of my former partners, Jeremy Liu at Lightspeed, I made this mistake a few times and he called me up one day and he said, hey, I think you're projecting as a former founder. And he's like, in my experience, that's very dangerous and very risky. And I think it was a great lesson.

SPEAKER_00

The reality is even if you have great ideas and you think you know the answer, even if you're right, the reality is it's the founder's company and they may want to build it a completely different way. And not only that, if you project your ideas on a team that you're evaluating, you might get it completely wrong. You might look at a business and say, I know what this company needs to do. It needs to do A, B, C, D, and then it's going to win. But if you make your bet based on that evaluation and that judgment and that team doesn't do those four things, you made a bad bet. So don't project.

SPEAKER_00

You have to really believe in the team and the team's judgment and the team's ability to execute on their own plan. So that was a big lesson for me as a former CEO. Founder, market, product. Great in one through three. When I first started this job, I would have said product, market, founder. I've completely flipped that. Now, founder, market, product. I think that the founder is the most important thing.

SPEAKER_01

[SPEAKER_00] At the end of the day, most startups, especially early stage startups, they're going to pivot in some form or another. [SPEAKER_00] What's most important is are they resilient? [SPEAKER_00] Can they execute? [SPEAKER_00] Can they adapt to change?

SPEAKER_00

When you get founder reads wrong, what do you not see that you wish you'd seen?

SPEAKER_01

[SPEAKER_00] I often see communication as a big hurdle for founders. [SPEAKER_00] I think one of the hardest things you can do as a leader is communicate effectively because I think communication touches every part of company building.

SPEAKER_00

It's part of recruiting, which, as we know, is one of the most important things you could do.

SPEAKER_01

[SPEAKER_00] You have to be able to communicate your mission, your values, why you exist, what you're trying to accomplish. [SPEAKER_00] You have to communicate to investors. [SPEAKER_00] If you're not a great communicator, you're not going to be able to raise capital. [SPEAKER_00] You're not going to be able to put venture dollars into the business. [SPEAKER_00] You need to be able to communicate your product vision to your team. [SPEAKER_00] How can you align the team around building the perfect product if you can't communicate it?

SPEAKER_00

You have to be able to tell your story to the market. When I think about some of the mistakes I've made in evaluation, it's maybe been on communication. That's probably been one of the biggest. What do you think the single biggest mistake in venture is you've made in terms of miss? I would say mine probably is one that you gave me, which is two of yours. I turned down Suno when David Frankl, founder of Collective, introduced me at The Seed. You know what the lesson was there? Really interesting. I hope Mikey's okay with me saying this. I'm sure he is. [SPEAKER_01] It was a 250K check or a 200K check. [SPEAKER_01] And so the ownership was 1%.

SPEAKER_01

And I was like, no, I need high ownership.

SPEAKER_00

[SPEAKER_01] My LPs tell me high ownership. [SPEAKER_01] And Granola Honesty was a lack of imagination. [SPEAKER_01] Chris, I saw, was great. [SPEAKER_01] But it was a very unformed idea. [SPEAKER_01] And I was like, I can't just do it.

SPEAKER_01

Founder. I can't. Founder first. Founder only thing.

SPEAKER_00

[SPEAKER_01] When founders, the other two don't exist.

SPEAKER_01

Yeah.

SPEAKER_00

Terrible mistakes there for both.

SPEAKER_01

[SPEAKER_00] Ironically, both you did very well on. [SPEAKER_00] So congrats. [SPEAKER_00] Two different motions, by the way.

SPEAKER_00

[SPEAKER_01] Sure. [SPEAKER_01] Granola for me was a pure founder bet. Pure founder bet. [SPEAKER_01] I knew Chris. [SPEAKER_01] I've known Chris now for 15 plus years. [SPEAKER_01] He's also not an amazing seller. I'm just going to give a big blank. But I knew Chris up close.

SPEAKER_01

[SPEAKER_00] That's the... [SPEAKER_00] You know, so when I was building Anchor, the Socratic office, Socratic was his previous startup, was right behind ours. [SPEAKER_00] And we did a few meetups together. [SPEAKER_00] You know, we've gotten our... We got our teams together for a few happy hours.

SPEAKER_00

And I...

SPEAKER_01

You know, I would talk to him as another founder. [SPEAKER_00] And we would share our struggles and get advice from each other.

SPEAKER_00

And I just... I was like, this guy, I know he can do it. I've seen him. I've seen him do it. Pure founder bet. Suno was something very different. Suno was a pure thesis-driven bet. But for me, the thesis came from actually the days of Anchor and seeing what it meant for a product to democratize a creative medium. And music had never really been fully democratized before AI. So I went out and I met with every team building AI for music. I went out and I hunted down every team. And I just... I was like, this guy, I know he can do it. I've seen him. I've seen him do it. Pure founder bet.

SPEAKER_01

Suna was something very different. Suna was a pure thesis-driven bet. But for me, the thesis came from actually the days of Anchor and seeing what it meant for a product to democratize a creative medium. And music had never really been fully democratized before AI. So I went out and I met with every team building AI for music. I went out and I hunted down every team. And then, of course, I met Mikey and the team. And I was like, wow, this is an incredible team. And then the founder lens came on. And I was like, this is an incredible team. How obvious is it when you meet a founder that you want to invest?

SPEAKER_00

With Mikey and the Suna founders, it was immediate. I met Mikey.

SPEAKER_01

Is it normally immediate?

SPEAKER_00

Not always. Not always. With Suna, it was. Mikey and I sat down at a restaurant near my home in Hoboken, New Jersey. His family's in Jersey. So we met up in Hoboken and we just immediately hit it off. Just instant, instant connection. And I immediately recognized not only how smart he and the team were about the models they were building, about their vision for the world, but also how passionate they were about the problem. Mikey is a former musician. And so I felt he could deeply, deeply connect to this idea of how do you make music creation, expressing yourself, creativity, how do you make it easier?

SPEAKER_00

When you're doing Suna at 5 billion, what are you underwriting that to? So we believe that Suna has unlimited upside potential. If you look back at the history of media on the internet and you think about the generational platforms that truly democratized a medium, right? YouTube, TikTok, Twitter, Facebook, to some extent, with writing and publishing. I mean, these are insanely valuable platforms. And you don't really think about the upside of them. Does Suna not have to move from a tool to a platform then?

SPEAKER_00

So I probably would have said yes when I invested. First of all, I do think it is a platform, but I think you're asking about something different. You're asking about a platform. Yeah, you're talking about, do you need a creator side and a consumer side? Similar to what we saw play out on Spotify as an example. I think when I originally invested, we thought that it did. [SPEAKER_01] Now, I'm not so sure that we understood what Suna could be back then.

SPEAKER_00

What is happening now in Suna is what Mikey and the team have been saying for a while and what I now believe—it's that it's literally a new behavior. The team calls it creative entertainment. People are coming into Suna. They're making music for the pure joy and entertainment value of making music. Previously, let's say on Anchor, you would make a podcast for the purpose of getting distribution and eventually monetizing it, right? Now, AI has made music creation so much fun that you're making music to make music. And I think it's actually not too dissimilar to what we see with Claude Code or Midjourney, right? Or some platforms that are making it easy to make games with AI. You have no greater aspiration for this content, right? You're not trying to become a hit game developer. You're just having a lot of fun making games on your computer. And we see that a lot in Suna.

SPEAKER_00

What miss? Brilliant. You should be a politician. I asked you what miss. I'll tell you about my two greatest hits. Thanks, dude.

SPEAKER_00

So one company that I would have loved to invest in a long time ago, which we didn't at Lightspeed. We met them a few times. And I think we could never really wrap our head around price. Also, at the time where they fit in the market. Now, I think with the benefit of hindsight, I really regret not ever having had the opportunity to invest in Substack. I really believe in Substack. I realize it's not your traditional AI company. But I think over the past eight years, and I think the trend is continuing, I think we're moving more and more towards a world of self-publishing and people controlling their own destiny in terms of media and what they create and what they publish and how they monetize it. And I think no company, maybe other than X, has done a better job of that than Substack. And so that's a company where I love the founders. I love the purpose behind the company. I love the product and the platform. Unfortunately, never got a chance to invest.

SPEAKER_00

Is traditional media dead? I think traditional media in many respects is dead. I think, you know, I go to these large houses, your Times of the world, your SKYs. And dude, they have these insane production places for pods that I know no one listens to. And the teams are ridiculous. And it's all like, guys, you don't get where this game has gone. I probably underestimated just how big independent media could become. When we built Anchor, we had this vision of democratizing audio and giving everyone a voice.

SPEAKER_01

And I would say by the time I left Spotify in 2022, I'll admit, I thought the opportunity was baked. I was like, OK, it's done. It's done. [SPEAKER_00] We've got YouTube. We've got Spotify. We've got, whatever. We've got X. It's gotten so much bigger since then. And that was only four years ago. So much bigger. I mean, every traditional TV show or media personality, everything has made the leap over to self-publishing or independent media. I mean, I think you're a model example. You've been doing this forever. But also just huge names that were on some of these large media organizations. They just made the leap. [SPEAKER_00] We've got YouTube.

SPEAKER_00

We've got Spotify.

SPEAKER_01

[SPEAKER_00] We've got whatever. [SPEAKER_00] We've got X. [SPEAKER_00] It's gotten so much bigger since then. [SPEAKER_00] And that was only four years ago.

SPEAKER_00

So much bigger.

SPEAKER_01

[SPEAKER_00] Every traditional TV show or media personality, everything has made the leap over to self-publishing or independent media. [SPEAKER_00] I think you're a model example.

SPEAKER_00

You've been doing this forever.

SPEAKER_01

[SPEAKER_00] But also just huge names that were on some of these large media organizations. [SPEAKER_00] They just made the leap.

SPEAKER_00

And now they just have a YouTube show or they just have a show on Spotify. I don't even think we've reached the peak yet. I think television is still in the process of being massively unbundled. When TechCrunch Europe shut down and now Wide Europe shut down, I coalesced the best writers in Europe. And I had 10 million bucks from very rich billionaires to bring together the next generation. And then I sat down with my investing team. And they're like, why are we doing this? We have no editorial control on them. Just like OpenAI don't on TBPN. [SPEAKER_01] We can't influence it. [SPEAKER_01] Yeah. [SPEAKER_01] What's the point? [SPEAKER_01] Yeah.

SPEAKER_00

[SPEAKER_01] And to your point, editorial freedom is everything. [SPEAKER_01] It's amazing. [SPEAKER_01] It's incredible. [SPEAKER_01] Again, which is why I love Substack. And why I like X. [SPEAKER_01] And why I like YouTube and Spotify. [SPEAKER_01] I think these platforms are amazing. [SPEAKER_01] Are you ready for a quick fire round? [SPEAKER_01] Sure. [SPEAKER_01] Single best first founder meeting you've ever had, Amoy? Bryn Putnam, CEO of Bored. Have you seen Bored? Tabletop gaming console. Just announced Series A a few weeks ago from USV. [SPEAKER_01] When I met Bored, when I met Bryn, I was blown away. [SPEAKER_01] Force of nature founder.

SPEAKER_00

[SPEAKER_01] Such clear vision. Such deep domain expertise. So prior to Bored, which is a beautiful tabletop display, Bryn was the founder and CEO of Mirror, the mirror workout device. Not well. Which she sold to Lululemon. She took that domain expertise and said, I know how to build a tabletop gaming console now with the same hardware and the same supply chains. And just crushed it. When I met her, I walked out of that meeting and I thought to myself, I have to invest in this company. One of the single greatest X's also. You have to give her credit. She's brilliant. You can invest in one seed fund. Which seed fund do you invest in?

SPEAKER_00

I'm a big fan of what Matt Hartman is doing with Factorial. Factorial is a fund. [SPEAKER_01] Do you know Matt? [SPEAKER_01] And do you know Factorial? [SPEAKER_01] Dude, I met Matt years ago when he was at Betaworks with John. [SPEAKER_01] Yeah, of course. [SPEAKER_01] And I went to Betaworks. And I remember they had a company called Poncho. Do you remember Poncho? Yeah, of course. You mentioned Chief Weather Officer earlier. [SPEAKER_01] I'm like, oh. [SPEAKER_01] Poncho's the original Chief Weather Officer. [SPEAKER_01] Yeah, yeah, yeah.

SPEAKER_01

And so I remember them doing Betaworks together. Matt's brilliant. [SPEAKER_00] So Matt has innovated on a completely new model of venture where he arms angel investors. These are not scouts. These are angel investors. He arms them with additional funds on top of their own capital, which then Factorial obviously then monetizes through carry and whatnot. But the brilliant thing about that model is now he's got all these great angel investors part of the Factorial network. [SPEAKER_00] These are people like Clem from Hugging Face, real angel investors. [SPEAKER_00] So I think that's brilliant.

SPEAKER_01

[SPEAKER_00] Second answer I would say tied for my favorite seed fund has got to be Haystack. [SPEAKER_00] I'm just a huge fan of Samil and Divya and the work they do. [SPEAKER_00] It's an incredible fund. [SPEAKER_00] Obviously, they've produced some generational outcomes. [SPEAKER_00] Who, when they send you a deal, is the high signal of quality? [SPEAKER_00] I was really fortunate at Lightspeed to collaborate closely with Nat Friedman and Daniel Gross before they went over to Meta. [SPEAKER_00] And yeah, when Nat would send me a deal, which he did on multiple occasions. And by the way, that's actually how I met Mikey from Suno.

SPEAKER_01

[SPEAKER_00] So I always knew to pay attention.

SPEAKER_00

If Nat's sending me a deal, I got to pay attention to that. That's the greatest shame in venture about them not investing. They were just so good. So good.

SPEAKER_01

[SPEAKER_00] So good. [SPEAKER_00] Oh my God.

SPEAKER_00

What is your favorite growth fund if you were to invest in one?

SPEAKER_01

[SPEAKER_00] I think the Lightspeed Growth Fund is phenomenal. [SPEAKER_00] Again, they've done Anthropic. They've done XAI.

SPEAKER_00

[SPEAKER_01] They've done SpaceX. They've done amazing, amazing investments over the past, over the history of the firm, but really over the past four years of AI, they've been phenomenal. What is your biggest lesson from working with Fred for the short time you have done? I would say one of the biggest lessons I've learned from Fred is that there is really nothing more important than your relationship with the founders. A, because that's probably the best thing you can do to help a founder is just to be there for them, right? That's what founders need. Founders are lonely.

SPEAKER_01

I could tell you as a former CEO, it's a lonely, punishing job.

SPEAKER_00

And so just having somebody you can actually trust and actually feel you're aligned with is very, very important.

SPEAKER_01

[SPEAKER_00] But secondly, selfishly, I think reputation is everything in this business.

SPEAKER_00

You need a great reputation. And the only way you're going to have a good reputation is if you have great relationships with founders. What's your biggest parenting advice? I heard that you are an incredible papa. You're also a great investor. What's the biggest parenting advice? I feel I was extremely fortunate growing up in that I had parents that were extremely supportive

SPEAKER_00

And so just having somebody you can actually trust and actually feel you're aligned with is very, very important. But secondly, I think reputation is everything in this business. You need a great reputation. And the only way you're going to have a good reputation is if you have great relationships with founders. What's your biggest parenting advice? I heard that you are an incredible papa. You're also a great investor. What's the biggest parenting advice?

SPEAKER_00

I feel I was extremely fortunate growing up in that I had parents that were extremely supportive of me and my interests, but who also did not pressure me in any one direction. I grew up, I'll give you an example. I grew up in a home where baseball, an American sport, I don't think it's very popular here, [SPEAKER_01] was a very big deal. Baseball is a very big deal.

SPEAKER_00

And I played some baseball growing up, but I didn't continue with it. And I think there are a lot of homes like that in the United States where if you're not playing the sport or going to the university or pursuing the career in the thing that the family really cares about, you're a failure or you get pressured into sticking with it. And my parents, my dad, who was a former coach and baseball player, just said, great, what do you want to do next? And I think that is so important. And it's definitely something that I really try to remember and try to instill in the values of my family with my kids. I really want my kids to do what interests them, but I never want to pressure them to do it. I want to support them. I want to be there for them. I want to drive them to practice. I want to do everything I can to empower them, but I never want to pressure them too much.

SPEAKER_00

I remember calling my mom and telling her I was dropping out of law school to do this podcast that made no money, having worked so hard for years to go to law school. She was like, cool, if that's what you think is best. Yeah. She might pressure test you, right? Hey, sure. [SPEAKER_01] Talk me through it. [SPEAKER_01] Talk me through it. But once you, I'm sure once you, or no, not even. Okay. I said, listen, I fell asleep in the first law lecture and I skipped and that's for you. And she was like, I think law's not for you. Yeah, yeah, yeah. But penultimate one for you. What have you changed your mind on most in the last 12 months?

SPEAKER_00

I do think that there was a moment not that long ago where I, and I know I said the opposite a few minutes ago, but where I thought the model providers could do everything. [SPEAKER_01] I did. You know, I thought that we were headed towards this world where there would be one company or five companies that would just do everything. And I think, fortunately, what I've been reminded of over the past year or so, or two years, is that companies can't do everything.

SPEAKER_00

They can't do everything. Even the biggest companies can't do everything. And I remember, 10 years ago, 15 years ago, we thought the same thing about Google. We thought the same thing about Apple. We thought these companies are going to just take everything. And the reality is they can't and they don't. And so I've been reminded of that recently and it's been a surprise and I'm glad for it. You work with Fred, who's obviously been around the block a few times.

SPEAKER_00

I don't work with him, but he's my papa, is Rory O'Driscoll from Scale, who likewise has been around the block a few times. He got into venture the same year I was born. And he reminds me that Microsoft at one point were looking at becoming a bank. That is how the incumbents just looked at everything. [SPEAKER_01] It works sometimes, right? AWS, great example. But they can't do everything. Final one for you. When you look forward to the next five to 10 years, what are you most excited for? I like optimism. What do you like? This is going to be amazing.

SPEAKER_00

[SPEAKER_01] So my partners the other day, Rebecca and Nick, we asked each other actually, what do you want? What do you want to do at USV? And I said three things. First thing is I want to show up to work each day and collaborate with people who I love being around, people who I enjoy collaborating with, people who I have fun with. That's actually number one for me.

SPEAKER_00

Number two is I want to partner with some incredible founders. And again, similarly, I want it to be about that relationship and that dynamic. You know, and I want these founders, obviously, who are going to change the world. And number three is I want to produce generational returns in terms of funds. In that order. Number one for me is show up to work, have fun with the people I work with. Number two is partner with founders who I love and who I believe can produce generational companies. And then number three is produce generational returns as a fund in that order. And I think that's a good recipe. I think if you optimize for fun and enjoying your day to day, good things will happen.

SPEAKER_00

Mike, I so appreciate you taking the time out on the London trip. I so appreciate you putting up with my bold stances as you recoil back and say, don't attribute it to me. Cut this. Cut this. Don't attribute it to me. I really appreciate the decade long friendship now. [SPEAKER_01] Unbelievable. You are a star, dude. Thank you so much. Mojitos. And so... When you're doing Suna at 5 billion, what are you underwriting that to? So we believe that Suna has, you know, I'm using this term loosely, but unlimited upside potential. You know, if you look back at the history of media on the internet and you think about the

SPEAKER_00

generational platforms that truly democratized a medium, right? YouTube, TikTok, you know, Twitter, Facebook, to some extent, with writing and publishing. I mean, these are insanely valuable platforms. And you don't really think about the upside of them. Does Suna not have to move from a tool to a platform then? So I probably would have said yes when I invested. First of all, I do think it is a platform, but I think you're asking about something different. You're asking a platform. Yeah, you're talking about, do you need a creator side and a consumer side? Similar to what we saw play out on Spotify as an example. I think when I originally invested, we thought that it did.

SPEAKER_01

Now, I'm not so sure that we understood what Suna could be back then.

SPEAKER_00

What is happening now in Suna is what Mikey and the team have been saying for a while and what I now believe, it's that it's literally a new behavior. The team calls it creative entertainment. People are coming into Suna. They're making music for the pure joy and entertainment value of making music. You know, previously, like let's say on Anchor, you would make a podcast for the purpose of getting distribution and eventually monetizing it, right? Now, AI has made music creation so much fun that you're making music to make music. And I think it's actually not too dissimilar to what we see with Claude Code or Midjourney, right?

SPEAKER_00

Or some platforms that are making it easy to make games with AI. You have no greater aspiration for this content, right? You're not trying to become a hit game developer. You're just having a lot of fun making games on your computer. And we see that a lot in Suna. What miss? Brilliant. You should be a politician. I asked you what miss. I'll tell you about my two greatest hits. Thanks, dude. So one company that I would have loved to invest in a long time ago, which we didn't at Lightspeed. We met them a few times. And I think we can never really wrap our head around kind of price. Also, at the time where they fit in the market.

SPEAKER_00

Now, I think with the benefit of hindsight, I really regret not ever having had the opportunity to invest in Substack. I really believe in Substack. I realize it's not your traditional sort of AI company. But I think over the past eight years, and I think the trend is continuing, I think we're moving more and more and more towards a world of self-publishing and people controlling their own destiny in terms of media and what they create and what they publish and how they monetize it. And I think no company, maybe other than X, has done a better job of that than Substack. And so that's a company where, you know, I love the founders. I love the purpose behind the company.

SPEAKER_00

I love the product and the platform. Unfortunately, never got a chance to invest. Is traditional media dead? I think traditional media in many respects is dead. I think, you know. I go to these large houses, your timeses of the world, your skies. And dude, they have these insane production places for pods that I know no one listens to. And the teams are ridiculous. And it's all like, guys, you don't get where this game has gone. I probably underestimated just how big independent media could become. When we built Anchor, you know, we had this vision of democratizing audio and giving everyone a voice.

SPEAKER_01

And I would say by the time I left Spotify in 2022, I'll admit, I kind of thought the opportunity was baked. I was like, OK, it's done. It's done.

SPEAKER_00

You know, we've got YouTube. We've got Spotify. We've got, you know, whatever. We've got X. It's gotten so much bigger since then. And that was only four years ago. So much bigger. I mean, every traditional TV show or, you know, media personality, everything has made the leap over to self-publishing or independent media. I mean, I think you're a model example. You've been doing this forever. But also just like huge names that were on some of these large media organizations. That just made the leap. And now they just have a YouTube show or they just have a show on Spotify. And so like, I don't even think we've reached the peak yet.

SPEAKER_00

I think television is still in the process of being massively unbundled. When TechCrunch Europe shut down and now Wide Europe shut down, I coalesced the best writers in Europe. And I had 10 million bucks from very rich billionaires to bring together the next generation. And then I sat down with my investing team. And they're like, why the fuck are we doing this? We have no editorial control on them. Just like OpenAI don't on TBPN.

SPEAKER_01

We can't influence it. Yeah. What's the point? Yeah. And to your point, editorial freedom is everything. It's amazing. It's incredible. Again, which is why I love Substack.

SPEAKER_00

And why I like X.

SPEAKER_01

And why I like YouTube and Spotify. I think these platforms are amazing. Are you ready for a quick fire round? Sure. Single best first founder meeting you've ever had, Amoy?

SPEAKER_00

Bryn Putnam, CEO of Bored. Have you seen Bored? Tabletop gaming console. Just announced Series A a few weeks ago from USV.

SPEAKER_01

When I met Bored, when I met Bryn, I was blown away. Force of nature founder. Such clear vision.

SPEAKER_00

Such deep domain expertise. So prior to Bored, which is a beautiful tabletop display, Bryn was the founder and CEO of Mirror, the mirror workout device. Not well. Which she sold to Lululemon. She took that domain expertise and said, I know how to build a tabletop gaming console now with the same hardware and the same supply chains. And just crushed it. When I met her, I walked out of that meeting and I thought to myself, I have to invest in this company. One of the single greatest X's also. You have to give her credit. She's brilliant. You can invest in one seed fund. Which seed fund do you invest in? I'm a big fan of what Matt Hartman is doing with Factorial.

SPEAKER_00

Factorial is a fund.

SPEAKER_01

Do you know Matt? And do you know Factorial? Dude, I met Matt years ago when he was at Betaworks with John. Yeah, of course. And I went to Betaworks.

SPEAKER_00

And I remember they had a company called Poncho. Do you remember Poncho? Yeah, of course. You mentioned Chief Weather Officer earlier. I'm like, oh.

SPEAKER_01

Poncho's the original Chief Weather Officer. Yeah, yeah, yeah. And so I remember them doing Betaworks together. Matt's brilliant.

SPEAKER_00

So Matt has innovated on a completely new model of venture where he arms angel investors. These are not scouts. These are angel investors. He arms them with additional funds on top of their own capital, which then Factorial obviously then monetizes through carry and whatnot.

SPEAKER_01

But the brilliant thing about that model is now he's got all these great angel investors

SPEAKER_00

part of the Factorial network. These are people like Clem from Hugging Face, like real angel investors. So I think that's brilliant. Second answer I would say tied for my favorite seed fund has got to be Haystack. I'm just a huge fan of Samil and Divya and the work they do. It's an incredible fund. Obviously, they've produced some generational outcomes. Who, when they send you a deal, is the high signal of quality? I was really fortunate at Lightspeed to collaborate closely with Nat Friedman and Daniel Gross before they went over to Meta. And yeah, when Nat would send me a deal, which he did on multiple occasions. And by the way, that's actually how I met Mikey from Suno.

SPEAKER_00

So, you know, I always knew to pay attention. You know, if Nat's sending me a deal, I got to pay attention to that. That's the greatest shame in venture about them not investing. They were just so good. So good. So good. I mean, oh my God. What is your favorite growth fund if you were to invest in one? I think the Lightspeed Growth Fund is phenomenal. I mean, again, they've done Anthropic.

SPEAKER_01

They've done XAI. They've done SpaceX.

SPEAKER_00

They've done amazing, amazing investments over the past, you know, I mean, over the history of the firm, but really over the past four years of AI, they've been phenomenal. What is your biggest lesson from working with Fred for the short time you have done? I would say one of the biggest lessons I've learned from Fred is that there is really nothing more important than your relationship with the founders. A, because that's probably the best thing you can do to help a founder is just to be there for them, right? Like that's what founders need. Founders are lonely.

SPEAKER_01

You know, I could tell you as a former CEO, it's a lonely, punishing job.

SPEAKER_00

And so just having somebody you can actually trust and actually feel you're aligned with is very, very important. But secondly, you know, selfishly, I think reputation is everything in this business. You need a great reputation. And the only way you're going to have a good reputation is if you have great relationships with founders. What's your biggest parenting advice? I heard that you are an incredible papa. You're also a great investor. What's the biggest parenting advice? I feel I was extremely fortunate growing up in that I had parents that were extremely supportive of me and my interests, but who also did not pressure me in any one direction.

SPEAKER_00

You know, I grew up, I'll give you an example. I grew up in a home where baseball, an American sport, I don't think it's very popular here,

SPEAKER_01

was a very big deal. Baseball is a very big deal. And I played some baseball growing up, but I didn't continue with it.

SPEAKER_00

And, you know, I think there are a lot of homes like that in the United States where, you know, if you're not playing the sport or going to the university or pursuing the career in the thing that the family really cares about, you know, you're a failure or you get pressured into sticking with it. And, you know, my parents, my dad, who, you know, a former coach and baseball player, just like, great, what do you want to do next? And I think that that is so important. And it's definitely something that I really try to remember and try to instill in the values of my family with my kids. You know, I really want my kids to do what interests them, but I never want to pressure

SPEAKER_00

them to do it. I want to support them. You know, I want to be there for them. I want to drive them to practice. I want to do everything I can to empower them, but I never want to pressure them too much. I remember calling my mom and telling her I was dropping out of law school to do this podcast that made no money, having worked so hard for years to go to law school. She was like, cool, if that's what you think is best. Yeah. She might pressure test you, right? Hey, sure. Like, talk me through it.

SPEAKER_01

Talk me through it. But once you, I'm sure once you, or no, not even. Okay.

SPEAKER_00

I said, listen, I fell asleep in the first law lecture and I skipped and that's for you. And she was like, I think law's not for you. Yeah, yeah, yeah. But penultimate one for you. What have you changed your mind on most in the last 12 months? I do think that there was a moment not that long ago where I, and I know I said the opposite a few minutes ago, but where I thought the model providers could do everything.

SPEAKER_01

I did. You know, I thought that we were headed towards this world where there would be one company or five companies that would just do everything. And I think, fortunately, what I've been reminded of over the past year or so, or two years, is that companies can't do everything.

SPEAKER_00

They can't do everything. Even the biggest companies can't do everything. And I remember, oh man, 10 years ago, 15 years ago, we thought the same thing about Google. We thought the same thing about Apple. We thought these companies are going to just take everything. And the reality is they can't and they don't. And so I've been reminded of that recently and it's been a surprise and I'm glad for it. You work with Fred, who's obviously been around the block a few times. I don't work with him, but he's my papa, is Rory O'Driscoll from Scale, who likewise has been around the block a few times. He got into venture the same year I was born.

SPEAKER_00

And he reminds me that Microsoft at one point were looking at becoming a bank. That is how the incumbents just looked at everything.

It works sometimes, right? AWS, great example. But they can't do everything. Final one for you. When you look forward to the next five to 10 years, what are you most excited for? I like optimism. What do you like? This is going to be amazing.

SPEAKER_01

So my partners the other day, Rebecca and Nick, we asked each other actually, what do you want? What do you want to do at USV? And I said three things. First thing is I want to show up to work each day and collaborate with people who I love being

SPEAKER_00

around, people who I enjoy collaborating with, people who I just have fun with.

SPEAKER_01

That's actually number one for me.

SPEAKER_00

Number two is I want to partner with some incredible founders. And again, like similarly, I want it to be about that relationship and that dynamic. You know, and I want these founders, obviously, who are going to change the world. And number three is I want to produce generational returns in terms of funds. In that order. Number one for me is show up to work, have fun with the people I work with. Number two is partner with founders who I love and who I believe can produce generational companies. And then number three is produce generational returns as a fund in that order. And I think that's a good recipe.

SPEAKER_00

I think if you optimize for fun and like enjoying your day to day, good things will happen. Mike, I so appreciate you taking the time out on the London trip. I so appreciate you putting up with my bold stances as you recoil back and go, don't attribute it to me. Cut this. Cut this. Don't attribute it to me. I really appreciate the decade long friendship now.

SPEAKER_01

Unbelievable. You are a star, dude. Thank you so much. Mojitos.