The Exchanges

Q to be quoting Chris Sacker quite a lot here, but he did state that a lot of the entrepreneurs and tech entrepreneurs in particular nowadays weren't actually, well, they were alive, but they can't remember the bubble of 2000, you know, possibly your 23, you know, your recent college graduates Can't remember the bubble. Do you see that as a possible problem in the fact that they maybe haven't learned?

A I think that it's our responsibility as founders and entrepreneurs to look back at history the same way that historians should, should look back at history to understand the future and understand how we got to where we are. You know, I was not particularly, um, of age to think about the, the, the 2000 bubble. I was, I think, you know, around, around, 12 or 13 years old at that time, but as I look back now, I look at the news articles, I, you know, read, uh, some of the pieces from some of the Harvard professors that have done case studies on it, and those are the types of things that we can use to understand the past events and how that happens, because then we can use that in those same exact learnings and be able to identify those in the future. I think that if we do that and we remember that the past, you know, is significant, we can Actually benefit and won't be a problem, but it is definitely the founder's responsibility to learn from those things.

AI assessment note: “I think that if we do that and we remember that the past... won't be a problem”

Q to be quoting Chris Sacker quite a lot here, but he did state that a lot of the entrepreneurs and tech entrepreneurs in particular nowadays weren't actually, well, they were alive, but they can't remember the bubble of 2000, you know, possibly your 23, you know, your recent college graduates Can't remember the bubble. Do you see that as a possible problem in the fact that they maybe haven't learned?

A I think that it's our responsibility as founders and entrepreneurs to look back at history the same way that historians should, should look back at history to understand the future and understand how we got to where we are. You know, I was not particularly, um, of age to think about the, the, the 2000 bubble. I was, I think, you know, around, around, 12 or 13 years old at that time, but as I look back now, I look at the news articles, I, you know, read, uh, some of the pieces from some of the Harvard professors that have done case studies on it, and those are the types of things that we can use to understand the past events and how that happens, because then we can use that in those same exact learnings and be able to identify those in the future. I think that if we do that and we remember that the past, you know, is significant, we can Actually benefit and won't be a problem, but it is definitely the founder's responsibility to learn from those things.

AI assessment note: “if we do that and we remember that the past... won't be a problem”

Q And an incredible takeaway from your article I found was the revelation that the amount of seed deals has fallen by nearly 300%. Is there a reason for this, do you think? And is there anything that has caused such a sudden decline?

A I think there's two things that, um, were interesting when I looked at this. I think it's, the amount of seed, uh, seed rounds are decreasing, but the amount of seed funding in the rounds themselves is increasing. So I think it's not necessarily, you know, if you look at both of those, it's just a shift where we're seeing less volume, but bigger rounds, and there's many ways that this can be looked at. It can be looked at from a situation where Companies need to raise more money to be able to get further within, within their business at that stage. And companies are becoming more capital intensive or their burn rates are increasing as, um, the needs to, to hire new people is increasing more rapidly for the seed rounds. And then for, to raise an A rounds, it almost seems slightly more difficult. And I think now we're looking at, you know, the seed rounds and It's going to be more difficult to raise a C round than it was, you know, a year ago, which I think is not necessarily a bad thing, because it's actually might stabilize some of the, uh, drop-offs in the number of C companies that can come through and actually get, uh, raise an A round when that time comes.

AI assessment note: “we're seeing less volume, but bigger rounds... Companies need to raise more money”

Q Now, you recently wrote a fantastic article in TechCrunch about the topic of the moment, are we in a bubble or not? In the article you compared a bubble to a forest fire. For our audience who haven't maybe managed to read that article yet, could you elaborate on that idea?

A Definitely. So, I grew up in Florida, and in Florida, there's, you know, the Everglades, which is a, somewhat of a protected, uh, forest area, and, you know, I learned there that, you know, there's forest fires that happen. It's very common in Florida, and the way they look at it is forest fires are necessary for growth in, in, in that area. As trees would, you know, uh, be burnt down, underbrush would be, uh, Turn to ash. That would all enter back into the, you know, ground and reproduce into the makings of the, basically the fertilizer for future growth and future, uh, trees and wildlife. You know, yes, there's, uh, damage and there's animals being displaced, but overall the net effects are positive as, you know, um, There's growth for later, later stages. I look at, you know, the tech industry in the same way. As big companies such as, you know, uh, larger companies that are just starting, or in companies that are, might not be as strong, but look strong right now, those types of companies might be, um, might not pan out, but later as they grow, as the industry develops, We'll be able to see that the, um, larger, uh, companies, they will withstand those flames, and they can grow stronger from them, and new companies and new industries will be able to develop out of those, uh, proved, out of those predecessors.

AI assessment note: “I look at, you know, the tech industry in the same way.”

Q And an incredible takeaway from your article I found was the revelation that the amount of seed deals has fallen by nearly 300%. Is there a reason for this, do you think? And is there anything that has caused such a sudden decline?

A I think there's two things that, um, were interesting when I looked at this. I think it's, the amount of seed, uh, seed rounds are decreasing, but the amount of seed funding in the rounds themselves is increasing. So I think it's not necessarily, you know, if you look at both of those, it's just a shift where we're seeing less volume, but bigger rounds, and there's many ways that this can be looked at. It can be looked at from a situation where Companies need to raise more money to be able to get further within, within their business at that stage. And companies are becoming more capital intensive or their burn rates are increasing as, um, the needs to, to hire new people is increasing more rapidly for the seed rounds. And then for, to raise an A rounds, it almost seems slightly more difficult. And I think now we're looking at, you know, the seed rounds and It's going to be more difficult to raise a C round than it was, you know, a year ago, which I think is not necessarily a bad thing, because it's actually might stabilize some of the, uh, drop-offs in the number of C companies that can come through and actually get, uh, raise an A round when that time comes.

AI assessment note: “Companies are becoming more capital intensive or their burn rates are increasing”

Q What do you think the cause is for that, then, that much smaller change?

A I think that that's stable. I think there's, you know, I mean, I look at B rounds as well, you know, they're, they're increasing. By 49%, but I think that it's overall, those two seem to be slightly more stable than the Series A and C, and I think that's because the value and the product market fit that VCs are often looking for, and, you know, often later rounds are, um, are becoming, are not going to change over time, whereas in a Series A and, you know, C, the qualifications for what a company needs to have can fluctuate. So, uh, seed, seed company, they might be pre, you know, pre-revenue, or we see a lot of companies pre-revenue even in the later stage, but they don't actually need to have product market fit yet.

AI assessment note: “I think that's because the value and the product market fit that VCs are often looking for”

Q Okay. And say a bubble is potentially coming. Are there any sectors or companies in particular that you think will survive Or even thrive in the presence of a bubble? And, and, and why?

A I think financial, the financial tech industry, and the banking industry, we're starting to see some, some disruption there, and I think that's going to definitely continue as time goes on. I think as it, you know, with With technology goals, when they're, when they exist, they penetrate the entire economy, and I think that if the banking industry would have this difficulty similar to it did in, you know, the 2000 bubble, that it could potentially be an interesting space where small entrepreneurs can make a big impact. Um, I think SaaS companies, I see them progressing through a bubble, um, Um, I think that companies that are the large companies that get enough funding, they'll continue to need the same amount of software that they need now, and I think that's going to continue to grow, because they've, they've built on an agile platform that can withstand those, you know, long-term fluctuations.

AI assessment note: “I think financial, the financial tech industry... I think SaaS companies, I see them progressing”

Q Okay. And say a bubble is potentially coming. Are there any sectors or companies in particular that you think will survive Or even thrive in the presence of a bubble? And, and, and why?

A I think financial, the financial tech industry, and the banking industry, we're starting to see some, some disruption there, and I think that's going to definitely continue as time goes on. I think as it, you know, with With technology goals, when they're, when they exist, they penetrate the entire economy, and I think that if the banking industry would have this difficulty similar to it did in, you know, the 2000 bubble, that it could potentially be an interesting space where small entrepreneurs can make a big impact. Um, I think SaaS companies, I see them progressing through a bubble, um, Um, I think that companies that are the large companies that get enough funding, they'll continue to need the same amount of software that they need now, and I think that's going to continue to grow, because they've, they've built on an agile platform that can withstand those, you know, long-term fluctuations.

AI assessment note: “I think financial, the financial tech industry, and the banking industry”

Q Um, sorry, ah, so we, we hear a lot about the lean VC model where you kind of do the scattergun approach where you, you know, invest in lots and hope that the one in 30 becomes a unicorn. Is, is that really saying that that's becoming a rarity now that we're concentrating and becoming very capital intensive on fewer startups?

A Well, I think that the quality of investments, and I think that there's two things I, I find interesting, is many venture capitalists, they, you know, the, putting a lot of emphasis on valuations, and we're, as founders, many founders look to find the best valuations, versus finding the venture capitalist, or investors that can bring the most value. And I think that investors are starting to, to recognize that. And that's why they might be also scaling back on the number of deals they're making, so they can make sure they're adding enough value to the, to the companies that are in their portfolios. And if a company does succeed, that they're able to continue to fund that growth and take advantage of the wins. I was listening to a chat with David McClure yesterday, um, he was, uh, a Stanford lecturer, and it was extremely interesting to hear of how his, his view of venture capital is definitely more long-term than And he's still, you know, relatively in the beginning aspects of building up 500 startups. Um, so I think that as we move on, I think the focus is definitely on not only the unicorns that are the, you know, billion dollar plus, but also the ones that can have stable growth will also be important to look at. But also the ones that can, you know, the unicorn growth, it's difficult to predict, as we're finding.

AI assessment note: “they might be also scaling back on the number of deals they're making”

Q the bubble to burst, and it would eventually lead to all the, uh, Um, fake personalities in the valley, you know, maybe your business school graduates who don't necessarily have the passion for the technology that the real technology enthusiasts do. He said he couldn't wait for the bubble because it would get rid of them, and only the hardcore would remain. Is that, is that slightly what it is?

A That's actually what got me, you know, it got me thinking about the, um, about the bubble, because in his interview, I think it was Jason Calacanis at the launch festival. It was extremely interesting to see that, that, that different perspective. A lot of people are looking at it through a negative lens, but there are lots of benefits to a potential bubble, and I think that in the long-term perspective, if we look from 2000 to now, I think that the 2000 bubble, or the, you know, dot-com bubble, has given us so much, um, learnings that we've been, that VCs as well as entrepreneurs are taking on in the age we're at now, and I think that's going to continue With, if this is a bubble, which, you know, it does seem like there's potential aspects of a bubble, we'll be able to learn from the lessons from what we're in now.

AI assessment note: “A lot of people are looking at it through a negative lens, but there are lots of benefits”

Q the bubble to burst, and it would eventually lead to all the, uh, Um, fake personalities in the valley, you know, maybe your business school graduates who don't necessarily have the passion for the technology that the real technology enthusiasts do. He said he couldn't wait for the bubble because it would get rid of them, and only the hardcore would remain. Is that, is that slightly what it is?

A That's actually what got me, you know, it got me thinking about the, um, about the bubble, because in his interview, I think it was Jason Calacanis at the launch festival. It was extremely interesting to see that, that, that different perspective. A lot of people are looking at it through a negative lens, but there are lots of benefits to a potential bubble, and I think that in the long-term perspective, if we look from 2000 to now, I think that the 2000 bubble, or the, you know, dot-com bubble, has given us so much, um, learnings that we've been, that VCs as well as entrepreneurs are taking on in the age we're at now, and I think that's going to continue With, if this is a bubble, which, you know, it does seem like there's potential aspects of a bubble, we'll be able to learn from the lessons from what we're in now.

AI assessment note: “there are lots of benefits to a potential bubble”

Q What do you think the cause is for that, then, that much smaller change?

A I think that that's stable. I think there's, you know, I mean, I look at B rounds as well, you know, they're, they're increasing. By 49%, but I think that it's overall, those two seem to be slightly more stable than the Series A and C, and I think that's because the value and the product market fit that VCs are often looking for, and, you know, often later rounds are, um, are becoming, are not going to change over time, whereas in a Series A and, you know, C, the qualifications for what a company needs to have can fluctuate. So, uh, seed, seed company, they might be pre, you know, pre-revenue, or we see a lot of companies pre-revenue even in the later stage, but they don't actually need to have product market fit yet.

AI assessment note: “I think that's because the value and the product market fit that VCs are often looking for”