The Exchanges

Q What are the biggest changes that you've seen post the correction that we've had over the last six months? I tweeted the other day about some trends I've observed. What are some big changes you've seen?

A The first one that comes to mind is what I would describe as almost like a, a suspension of your own criticism. Like, I think like we went through such a phase of people just pumping everything they possibly could rampant intellectual dishonesty, all these different things. And I'm surprised. I thought that it would be more humbling for more people I think that there's been this sort of, like, suspension of criticism. Like, people are desperately trying to avoid having to come to grips with what they did, basically, like, with what a lot of people did over the last couple years. That worries me a lot, because I think that, like, this is a great opportunity to sit back and reflect on what should we have done differently, what could you have done differently, whatever. Um, so I, I think I expected a little bit more of the, like, you know, mea culpa. Um, and there's not been Much of that at all. So that's, that's certainly a trend of like people just trying to move on to the next thing or whatever. The second thing I think is that companies are more thoughtful about, about like what matters most in the way that they build their business from a storytelling perspective. Like, I think that before it was just this idea that like, Hey, like if you almost, if you have a pulse and you have some indication of an interesting market or whatever, there's going to be enough people that get j…

AI assessment note: “The first one that comes to mind is what I would describe as almost like”

Q Not at all. I've been excited for this one, especially when I saw your suggestions for the show, but I want to start with a little bit on you. So many great firms you've worked at, but how did you first make your way into the world of Venture, and most recently come to be a GP at Contrary?

A Yeah. So my journey is very circuitous. I, I was not, I didn't know anything about venture startups growing up. Um, I was actually, I was obsessed with film growing up. And so when I got to school, my original major was actually filmmaking. Uh, my magnum opus that I created, you can still find on YouTube was Pokemon love song. So I was very into film and videos and I was paying for college doing, you know, wedding videos and commercials and, and things like that. Um, So that focus on film was a big, uh, was a big part of my life. And then eventually got to the point where I had too many clients. And so I just started farming them out to other creatives. I'd take two percent on whatever they would make. And before I knew it, I realized I was much better at getting jobs than I was at making videos. And so I kind of transitioned to that as a full-time job. And I joked that I was, I was running a creator marketplace long before it was cool. I didn't know to call it that, but I, I built this really crappy website. I Expanded to graphic designers and photographers, and I was helping them get jobs and do all these different things. So that was my first exposure. I didn't even know to call that a startup. You can ask my wife for the entire time I ran it. Basically, I called it a project. I was just working on a project because I was so used to a job being a very different thing. And ev…

AI assessment note: “So my journey is very circuitous. I, I was not, I didn't know anything”

Q is like the biggest sign of strength from YC, and I, I was worried about them for a while. Now I'm like, fucking buy YC long hold. Are you with me? And like, do you think they've just completely regained all power from the unbundling, because we did see this kind of splattering of the unbundling of accelerators, uh, which I think now Power retained, concentrated, centralized. Do you agree?

A Yeah. I mean, I think YC has built something again, like I use this word. I try not to throw it around, even though it's one of these, these buzzy venture words, but like I talk about having built a generational community because it is, is this sort of once in a generation thing that people have built and have a affiliation with, I think there's nothing like it. And I think that the other thing that even, I don't even know that I would have ever said I was, um, worried about YC per se. I think that the like drive to access and having more and more people, it dilutes the experience on the micro for sure. Like individuals experience can be more negative, but I still think it's getting them exposure and, and closeness to really high quality people. But I think the biggest thing is that it's a compounding effect, like no firm compounds the way that YC does because it's so expansive and so involved in all these different aspects and can bring people into the, in these different ways. That I think, like, that compounding effect on YC is not going anywhere.

AI assessment note: “that compounding effect on YC is not going anywhere.”

Q No, I agree with you. I think it's coming. Um, what would you most like to change about the world of venture?

A I wish there was a better way. We talk about this a lot because we're so community focused at Contrary. I wish there was a better way to de-risk those earliest days of starting a company. Like, I think that there are a lot of ambitious people sort of trapped in a, um, like systemic risk intolerance of their, because of their circumstances or whatever. And I wish that we could lower the bar for that risk curve. Like it's scary because as a capital allocator, I have to think about risk management and I have I have to be thoughtful about different risks. I try as hard as I can to not let my, my biases that exist exist for everyone stop me. But I wish that we could, we could de-risk that, that sort of journey into being able to build something.

AI assessment note: “I wish there was a better way to de-risk those earliest days”

Q No, I agree with you. I think it's coming. Um, what would you most like to change about the world of venture?

A I wish there was a better way. We talk about this a lot because we're so community focused at Contrary. I wish there was a better way to de-risk those earliest days of starting a company. Like, I think that there are a lot of ambitious people sort of trapped in a, um, like systemic risk intolerance of their, because of their circumstances or whatever. And I wish that we could lower the bar for that risk curve. Like it's scary because as a capital allocator, I have to think about risk management and I have I have to be thoughtful about different risks. I try as hard as I can to not let my, my biases that exist exist for everyone stop me. But I wish that we could, we could de-risk that, that sort of journey into being able to build something.

AI assessment note: “I wish there was a better way to de-risk those earliest days of starting a company.”

Q their investors. Even though they're shit, and the last time someone went to them for funding was in 2012. And so, the next question is, I get you on everything that you said, and I agree with everything that I said, we're on the same page, but it takes so long for a venture firm to die, and they've delivered DPI, will they not just continue with another 10 years?

A I, I don't disagree with that. I think it's all relative. I think that there are The idea of venture, like this is something I think about a lot. I try and keep me, it helps keep me humble and honest and things like I wrote this article a few months ago called the death of a venture fund. And I went through, I went and interviewed a bunch of people and I say, it is actually inspired by, um, Roloff was on, I think, invest like the best. And he was talking about this exercise that they do at Sequoia where they say, all right, the group of us in this room, imagine that we presided over the decline of Sequoia. What happened? What did we do wrong? Right? That sort of pre-mortem of evaluating what could cause the death of a firm like Sequoia. And so I, I dug into that and I think venture has a lot of main character energy. Um, but we forget that we're like relatively a baby, right? When you think about like financial services have existed for thousands of years, even software, at least as a primitive has been, you know, got like Ada Lovelace in the 1800. Like all of these things are very old. Venture is relatively pretty young, right? Like maybe the forties and fifties and stuff. And so it's not even a hundred years old. And so there's that reality is that it's as a sort of industry, it's very young. Number one, number two, we're, we're getting to internet time, right? So maybe it to…

AI assessment note: “I think that that pace is going to increase. Like information gets disseminated more quickly.”

Q Okay. Country does a 50 X fund shoots out the park and here's your family office today, Kyle, how would you structure it? And what would you do in terms of your approach to direct fund investments? How would you do it?

A I mean, I think that one of the things that, and then, so there's two things. So number one, there is, uh, Diversification, right? I do actually think that there is an opportunity to invest in lots of different things. I really liked the, um, episode you did with Will. You talk about the, the sort of venture firms that aren't really venture firms. I think that there are a lot of people that there's a lot of companies that shouldn't raise venture. There's a lot of great businesses that can get built without venture. Like there's all these different pools. And so I think that number one, there is, there is a more disciplined approach to diversification. Number two, when you think about allocating capital to venture, For me, I think it goes back to some of the things that you talked about, right? Which is, is looking for allocators that, and fund managers that have these characteristics of being able to identify their unique funnel. But I think the biggest thing for me would be focusing on where the biggest pockets of, of high quality people are congregating. Like, I think that there's, there's still always the like halo effect where any founder, regardless of their previous affiliations are going to go where those halo effects exist. And I think that's always going to be true. And there's always going to be the desire to allocate to the, you know, the best firms or the most well-…

AI assessment note: “for me, it is all about allocating to who has access to these pockets”

Q and the community there, because you mentioned it. You said before, it will get more focused on deep personal relationships as a landscape and as it, like, what will make one win. What is, like, more deep personal relationships Actually mean, what does like community actually mean in venture? They're kind of fluffy words respectfully that are thrown around a lot. How do you actually think about it in practice?

A So this goes back and I mentioned it before, right? The, the article that I wrote about the unbundling of venture capital, it actually comes from, I mean, I focus it very much on venture and these, you know, renegades and stuff. The idea was sort of born out of this article by David Perel called naked brands, And he goes through all these examples of ways that different, um, sort of industries are changing. So he talks about like fashion and sports and media and, and how people are progressively transitioning to trust more in people that they can empathize with and versus just like brands that they can trust. Right. So it's like progressively less about Coca-Cola and more about like LeBron James or whatever. That dynamic I think is a, is a function of like, you know, we're steeped in the internet. Like, there's so much of what we see, so much information that to be able to, you know, discern what we want to be associated with, there is this like essence we talked about before, right? There's this essence of like vibes that people give off. And when I think about the deeper personal relationships, I think there is like more sort of like shallow functional relationships. And then there is the person who, you know, you have an actual deep friendship with and relationship with, and that's not always like a deep friendship is not always scalable to massive amounts of founders and st…

AI assessment note: “transitioning to trust more in people that they can empathize with and versus just like brands”

Q Okay. Country does a 50 X fund shoots out the park and here's your family office today, Kyle, how would you structure it? And what would you do in terms of your approach to direct fund investments? How would you do it?

A I mean, I think that one of the things that, and then, so there's two things. So number one, there is, uh, Diversification, right? I do actually think that there is an opportunity to invest in lots of different things. I really liked the, um, episode you did with Will. You talk about the, the sort of venture firms that aren't really venture firms. I think that there are a lot of people that there's a lot of companies that shouldn't raise venture. There's a lot of great businesses that can get built without venture. Like there's all these different pools. And so I think that number one, there is, there is a more disciplined approach to diversification. Number two, when you think about allocating capital to venture, For me, I think it goes back to some of the things that you talked about, right? Which is, is looking for allocators that, and fund managers that have these characteristics of being able to identify their unique funnel. But I think the biggest thing for me would be focusing on where the biggest pockets of, of high quality people are congregating. Like, I think that there's, there's still always the like halo effect where any founder, regardless of their previous affiliations are going to go where those halo effects exist. And I think that's always going to be true. And there's always going to be the desire to allocate to the, you know, the best firms or the most well-…

AI assessment note: “number one, there is, there is a more disciplined approach to diversification.”

Q their investors. Even though they're shit, and the last time someone went to them for funding was in 2012. And so, the next question is, I get you on everything that you said, and I agree with everything that I said, we're on the same page, but it takes so long for a venture firm to die, and they've delivered DPI, will they not just continue with another 10 years?

A I, I don't disagree with that. I think it's all relative. I think that there are The idea of venture, like this is something I think about a lot. I try and keep me, it helps keep me humble and honest and things like I wrote this article a few months ago called the death of a venture fund. And I went through, I went and interviewed a bunch of people and I say, it is actually inspired by, um, Roloff was on, I think, invest like the best. And he was talking about this exercise that they do at Sequoia where they say, all right, the group of us in this room, imagine that we presided over the decline of Sequoia. What happened? What did we do wrong? Right? That sort of pre-mortem of evaluating what could cause the death of a firm like Sequoia. And so I, I dug into that and I think venture has a lot of main character energy. Um, but we forget that we're like relatively a baby, right? When you think about like financial services have existed for thousands of years, even software, at least as a primitive has been, you know, got like Ada Lovelace in the 1800. Like all of these things are very old. Venture is relatively pretty young, right? Like maybe the forties and fifties and stuff. And so it's not even a hundred years old. And so there's that reality is that it's as a sort of industry, it's very young. Number one, number two, we're, we're getting to internet time, right? So maybe it to…

AI assessment note: “I think that that pace is going to increase.”

Q Yeah, no, listen, I totally agree. Speaking of, kind of, compounding effects and power, there was something that we, kind of, went back and forth on before on emails, and it was your concern about the blackstone of innovation, and I thought it was really interesting, kind of, phrasing. What did you mean by the blackstone of innovation, and why are you concerned about it?

A So I'd credit Gabby Goldberg is the one who first she and I riffed on this idea back and forth. And I thought it was, is, is super interesting. And so I read the biography of Steven Schwartzman, the founder of Blackstone a couple of years ago. And there's this quote that really struck me where he talks about how they build businesses. And the idea was basically like, if we come across the right person to scale a business in a great investment class, Why not? We can apply our strengths, our network, our resources, whatever. And like, they're so focused not on being like a very, we're not just a private equity firm, we're not this, we're not that, we're everything. And now they're effectively a holding company for financial asset class, right? And like, eight hundred billion of AUM, they've got private equity, real estate, hedge funds, credit funds, whatever. They're constantly just, they think of it almost like exposure. And I feel like, so somebody, I don't remember who, but somebody said this idea that building a business Like, 80% or something of building a business is kind of the same thing across the board. It's that 20% that's super unique to the company and the market and the circumstances that is kind of the secret sauce. And if that is true, I feel like Blackstone has done a really good job of figuring out what the 80% is, is they've just built this, like, infrastructur…

AI assessment note: “Blackstone has done a really good job of figuring out what the 80% is”

Q and the community there, because you mentioned it. You said before, it will get more focused on deep personal relationships as a landscape and as it, like, what will make one win. What is, like, more deep personal relationships Actually mean, what does like community actually mean in venture? They're kind of fluffy words respectfully that are thrown around a lot. How do you actually think about it in practice?

A So this goes back and I mentioned it before, right? The, the article that I wrote about the unbundling of venture capital, it actually comes from, I mean, I focus it very much on venture and these, you know, renegades and stuff. The idea was sort of born out of this article by David Perel called naked brands, And he goes through all these examples of ways that different, um, sort of industries are changing. So he talks about like fashion and sports and media and, and how people are progressively transitioning to trust more in people that they can empathize with and versus just like brands that they can trust. Right. So it's like progressively less about Coca-Cola and more about like LeBron James or whatever. That dynamic I think is a, is a function of like, you know, we're steeped in the internet. Like, there's so much of what we see, so much information that to be able to, you know, discern what we want to be associated with, there is this like essence we talked about before, right? There's this essence of like vibes that people give off. And when I think about the deeper personal relationships, I think there is like more sort of like shallow functional relationships. And then there is the person who, you know, you have an actual deep friendship with and relationship with, and that's not always like a deep friendship is not always scalable to massive amounts of founders and st…

AI assessment note: “when I think about the deeper personal relationships, I think there is like more sort”

Q so of course you would invest and get a 1.6 X and do contrary and potentially get a seven X because they might get fired if you guys break up and hate each other. If Andreessen doesn't work out, they, they got into Andreessen. Well done. Well done. Shame. It didn't work out. So what do we need to see change in terms of LP incentives to fundamentally change this?

A I think that one of the things that I have thought a lot about and, and I don't know, honestly, like in, in this market, I don't know what's going to happen. I think that the sources of wealth will change. I don't know how, you know, when you think about it's actually the, the family office circuit is a fascinating world and the ways that people make their money and the people who are brought in to help manage that money and stuff like that. I think that a lot of that is not, it's not, it's not likely to change. I think that the transition that we will see Is that more and more of the wealth that gets created, if you think about this massive pool that exists and this not to say, I think that there's a whole other bag to unpack for massive institutional endowments and pensions and things like that. But just within these like long tail pockets of capital that exists out there to go get the question becomes, where is that wealth going to come from? And does it turn over over time? And it feels like the opportunity to be able to have wealth coming from different sources that think about things differently. Like already I have started to see, I feel like I kind of exist in two planes of existence on Twitter, where I, on the one hand, I have this very like venture tech heavy world. Then for whatever reason, I've kind of stumbled into this, like, you know, family office, institutional…

AI assessment note: “I think that the sources of wealth will change.”

Q so of course you would invest and get a 1.6 X and do contrary and potentially get a seven X because they might get fired if you guys break up and hate each other. If Andreessen doesn't work out, they, they got into Andreessen. Well done. Well done. Shame. It didn't work out. So what do we need to see change in terms of LP incentives to fundamentally change this?

A I think that one of the things that I have thought a lot about and, and I don't know, honestly, like in, in this market, I don't know what's going to happen. I think that the sources of wealth will change. I don't know how, you know, when you think about it's actually the, the family office circuit is a fascinating world and the ways that people make their money and the people who are brought in to help manage that money and stuff like that. I think that a lot of that is not, it's not, it's not likely to change. I think that the transition that we will see Is that more and more of the wealth that gets created, if you think about this massive pool that exists and this not to say, I think that there's a whole other bag to unpack for massive institutional endowments and pensions and things like that. But just within these like long tail pockets of capital that exists out there to go get the question becomes, where is that wealth going to come from? And does it turn over over time? And it feels like the opportunity to be able to have wealth coming from different sources that think about things differently. Like already I have started to see, I feel like I kind of exist in two planes of existence on Twitter, where I, on the one hand, I have this very like venture tech heavy world. Then for whatever reason, I've kind of stumbled into this, like, you know, family office, institutional…

AI assessment note: “I don't know, honestly, like in, in this market, I don't know what's going to happen.”