The Exchanges

Q Final one for the quickfire, and it's not the best, but who's the most memorable board member from the positive side, where they really were an incredible partner to the CEO that you worked with, maybe outside the first round family?

A I'll combine this one with, if you think about someone who is involved in Roblox that people don't know so much, Is Anthony Lee of Altos Ventures. If you want to talk to me about Roblox, you really want to talk to him about it, because he led that first round that we didn't get involved in. He's been in the company since before we were, and he has remained on the board to this day, and when Roblox went public, Altos owned about 24% of the company, and you don't know who he is, or you might not know who he is. He is the most under the radar You talk about the substance to hype ratio, and again, he's just been the absolute most consistent voice of reason, understanding the product. I would say that he would go into Roblox, I don't know if it was every week or every other week, but he was in the company, sleeves rolled up, in between board meetings for 13 years. So, you got to get him on your show.

AI assessment note: “Is Anthony Lee of Altos Ventures.”

Q I ask a tough one, which is like, when you have companies like Roblox, which do fundamentally change the game in so many ways, how do you prevent past successes or failures influence future decision making in terms of like, you know, gaming platforms now, whenever you meet them being all paved with gold, because you see how good it can be with Roblox. How do you prevent that infiltration?

A Yeah, I think you can use it positively, and you need to be careful to not have it impact you negatively. Like, so I'll give you on the negative side, I work with Josh at Half.com. We were acquired by eBay, so I spent a lot of time in e-commerce, person-to-person e-commerce, and really felt like I knew it very well, and remember, we had the opportunity to look at Etsy, and I was almost dismissive, or I just thought of it as this little niche of handmade goods or something, and I think I was jaded. I mean, I thought I knew so much from eBay that it kind of turned me off to the whole category of what might Take them on. But I would say on the positive side, we're fortunate to be investors in a company called Rec Room, which started out as a pure virtual reality play, but with avatars and shared worlds and building experiences together. I could see early on it had a lot of similarities to Roblox. They have played that out in even a faster level and had some hype along with a lot of substance. To your point about preemptive rounds, Sequoia and Index just led a round that valued that once little company rec room at over a billion dollars, so I would say being in Roblox was helpful for me to see what this next generation VR originally version could be, and they're kind of so far living up to that, so that's what I've learned.

AI assessment note: “I think you can use it positively, and you need to be careful”

Q If you were to choose one thing above anything else, and it can't be team, but that drove their success, what would it be?

A When the inflection point started to happen, there was, you know, a lot of different opinions of what was really driving it. My takeaway would be it was a thousand small things that they kept tweaking and working on consistently for years and years. I would also point to, in my opinion, one big thing that changed the thinking and drove them to new platforms was when they got accepted to be on the X Xbox platform. In order to do that, they couldn't just open up all the millions of games that they have on Roblox that can look like YouTube in terms of almost too much choice, and Microsoft and Xbox forced them to have a very limited small number of games that were on that version of Roblox. I think it was six games, and I believe that forced them to think about quality over quantity. Really focus on how good the games were, the first onboarding experience. It worked extremely well on Xbox, and I think that informed how important it was to have that same kind of experience, getting the best games front and center on the rest of the platform as well.

AI assessment note: “one big thing that changed the thinking... was when they got accepted to be on the X Xbox platform.”

Q the rules on. I do want to dive into some lessons, though, because with these kind of incredible journeys, there are several lessons that one can take from them, and one that you've said is the slow bake versus the fast bake, and, you know, how can I not dive on that element? What did you mean by the Slow bake versus the fast bake in context with FRC here.

A Yeah, well, I think part of it is when you look back at a vintage of companies or a fund, it's not always obvious who the winners are out of the gate. Very clearly for us in the case of First Round Capital II, when we made our last investment in that, I distinctly remember looking with our partners, looking back and saying, are there any really great companies in this fund? And it turns out that fund had Uber and Square and Roblox in it. And we didn't know it at the time. Now, Square and Uber became what they're known for today much more quickly, and people have been excited about them, and, you know, the valuations have reflected that for a long time. Roblox was almost under the radar for probably 10, certainly nine or 10 of the 13 years we've been involved. You could very much call that a slow bake. It was quietly, but still consistently growing, but always under the radar. And, you know, I think one of the lessons is we've learned that some of these companies just take a longer time to bake and to percolate and become what they can be.

AI assessment note: “some of these companies just take a longer time to bake and to percolate”

Q I do want to move to Dave and to the team, because, you know, you had an incredible purview with your board seat for many years, and when I spoke to many people before the show about David, everyone describes him as persistent, When you look at him, how has he evolved and developed as a CEO in your mind over the, what is it, 14 years now?

A Yeah, I think the development and even transformation of Dave Buzuki as a CEO, there'll be books written on it. It's the most profound leveling up I've ever seen firsthand. Like, I think there'll be pictures of Jeff Bezos when he was skinny and, you know, young and had hair, and then he's bulked up and walking around Sun Valley Like, before and after, that would be a metaphor in my mind for how, not how Dave looks, but how he's developed personally, how he's been able to lead a team that is absolutely world-class, and even his decision, which is his personal decision to become a public company. There were a few years of board members politely, nicely asking when Dave thought he might be ready to be a public company, and it was always off in the future, and then there was one board meeting where the bit had flipped. And Dave had changed his mind and decided he, uh, wanted to be a public company and a public company CEO, and it was off to the races, and it's been incredible to see him do it. He's built himself up personally through coaching. He's become an expert on interviewing and hiring. Like, when there's an open role, he will interview a dozen of the world's best people at that role in order to find the one that is the right and best fit for Roblox. You're seeing it as he's building out and developing the Board of Directors. It's incredible to watch.

AI assessment note: “It's the most profound leveling up I've ever seen firsthand.”

Q If you were to choose one thing above anything else, and it can't be team, but that drove their success, what would it be?

A When the inflection point started to happen, there was, you know, a lot of different opinions of what was really driving it. My takeaway would be it was a thousand small things that they kept tweaking and working on consistently for years and years. I would also point to, in my opinion, one big thing that changed the thinking and drove them to new platforms was when they got accepted to be on the X Xbox platform. In order to do that, they couldn't just open up all the millions of games that they have on Roblox that can look like YouTube in terms of almost too much choice, and Microsoft and Xbox forced them to have a very limited small number of games that were on that version of Roblox. I think it was six games, and I believe that forced them to think about quality over quantity. Really focus on how good the games were, the first onboarding experience. It worked extremely well on Xbox, and I think that informed how important it was to have that same kind of experience, getting the best games front and center on the rest of the platform as well.

AI assessment note: “forced them to think about quality over quantity”

Q the rules on. I do want to dive into some lessons, though, because with these kind of incredible journeys, there are several lessons that one can take from them, and one that you've said is the slow bake versus the fast bake, and, you know, how can I not dive on that element? What did you mean by the Slow bake versus the fast bake in context with FRC here.

A Yeah, well, I think part of it is when you look back at a vintage of companies or a fund, it's not always obvious who the winners are out of the gate. Very clearly for us in the case of First Round Capital II, when we made our last investment in that, I distinctly remember looking with our partners, looking back and saying, are there any really great companies in this fund? And it turns out that fund had Uber and Square and Roblox in it. And we didn't know it at the time. Now, Square and Uber became what they're known for today much more quickly, and people have been excited about them, and, you know, the valuations have reflected that for a long time. Roblox was almost under the radar for probably 10, certainly nine or 10 of the 13 years we've been involved. You could very much call that a slow bake. It was quietly, but still consistently growing, but always under the radar. And, you know, I think one of the lessons is we've learned that some of these companies just take a longer time to bake and to percolate and become what they can be.

AI assessment note: “Roblox was almost under the radar... You could very much call that a slow bake.”

Q Now, I do want to dive straight in today. We're going to unpack the original investment, really, for you with Roblox, you know, way back in 2007. So I want to start with some history, with some story. So how did you meet the team? Where was the meeting? Can you kind of paint that picture for me?

A Sure. So we were introduced in the fall of 2007. The first thing I did, given that it was a game, was I asked my son to take a look at it with me. So he and I started playing. I was introduced to the CEO, David Buzuki, November, 2007. And for the next two months, we dug into the business and my partners took a look with me. We got interested, we got close, but sadly, or at least initially for us, we decided not to invest in January of 2008. A lot of it was based on the price. Your listeners might laugh, but a ten million dollar valuation seemed outrageous, was way out of our normal range back then, and the game really looked raw. It was not anywhere near what it looks like today. Very blocky, broke a lot, hard to get going with it, and we passed, but luckily did it in such a way that I kept a relationship with Dave. Very glad that my son Max kept playing almost every day, And I would watch him and play with him, and it gave me a good reason to stay in touch with Dave and to keep seeing him on trips to California and getting updated on the business, and luckily about six months later, we were able to make our first small investment and then later on did a larger investment.

AI assessment note: “I was introduced to the CEO, David Buzuki, November, 2007.”

Q Can I ask also, you mentioned the element of the price being a sticker there for you, and the challenge to get over. You know, I'm really struggling right now when we look at pricing environments How do you determine when to pay up versus when to stay disciplined, and how do you think about your own relationship to price?

A Yeah, I think we might have been fortunate back in those days to have made a really poor investment decision, missed one of our biggest of all time, with Twitter. When we were all early users, we had an opportunity to invest at first round, and didn't, primarily, really only because the price was twenty million dollars. I remember the conversation where we said it just doesn't fit our fund model. Didn't feel right at the time, and clearly was a big miss for us, but it informed us to not get hung up on price for what we think can be breakout companies, and so one example where we learned and invested at an even higher price was with Square, Jack Dorsey's then new company, and another example would be Roblox. We invested at about an eleven million dollar valuation when we first came in, and then we led around And put in about three million dollars at what was around a forty million dollar valuation, which was very high, but we could see the traction in the revenue, and that, again, it turns out to be one of the best investments that we ever made.

AI assessment note: “informed us to not get hung up on price for what we think can be breakout companies”

Q In terms of the mechanism of your purview, we mentioned, you know, your role on the board. I do want to ask, how do you think about your own style of board membership today? And then we'll touch on roadblocks in particular.

A I like to be as engaged and partnered and supporting the CEO as I possibly can. I've been a board observer as much as board member over, Many of the companies that I've worked with over 15 years, one of the times that I kind of took pride in, in not making a distinction between observing and being a board member was one of our companies was acquired by Adobe. When we were needing to work on the paperwork, neither the CEO nor I could remember if I was actually a board member or just an observer. And I was an observer, so I didn't have to sign anything, but it just showed that we were acting as if I was the full board member. That's the role I try and play, and I've worked in startups. And in tech companies and pitched VCs as part of the first 20 years in business. So I have that perspective as an operator. I'm a sales and business development guy at heart, and so I bring that perspective. And then as an investor at first round for the last 15 years, I've deployed about a hundred million dollars in about 75 companies. Got to work with dozens and dozens of great founders and kind of shift into that role. So that's what I bring to the table.

AI assessment note: “I like to be as engaged and partnered and supporting the CEO as I possibly can.”

Q Now, I do want to dive straight in today. We're going to unpack the original investment, really, for you with Roblox, you know, way back in 2007. So I want to start with some history, with some story. So how did you meet the team? Where was the meeting? Can you kind of paint that picture for me?

A Sure. So we were introduced in the fall of 2007. The first thing I did, given that it was a game, was I asked my son to take a look at it with me. So he and I started playing. I was introduced to the CEO, David Buzuki, November, 2007. And for the next two months, we dug into the business and my partners took a look with me. We got interested, we got close, but sadly, or at least initially for us, we decided not to invest in January of 2008. A lot of it was based on the price. Your listeners might laugh, but a ten million dollar valuation seemed outrageous, was way out of our normal range back then, and the game really looked raw. It was not anywhere near what it looks like today. Very blocky, broke a lot, hard to get going with it, and we passed, but luckily did it in such a way that I kept a relationship with Dave. Very glad that my son Max kept playing almost every day, And I would watch him and play with him, and it gave me a good reason to stay in touch with Dave and to keep seeing him on trips to California and getting updated on the business, and luckily about six months later, we were able to make our first small investment and then later on did a larger investment.

AI assessment note: “I was introduced to the CEO, David Buzuki, November, 2007.”

Q Can I ask also, you mentioned the element of the price being a sticker there for you, and the challenge to get over. You know, I'm really struggling right now when we look at pricing environments How do you determine when to pay up versus when to stay disciplined, and how do you think about your own relationship to price?

A Yeah, I think we might have been fortunate back in those days to have made a really poor investment decision, missed one of our biggest of all time, with Twitter. When we were all early users, we had an opportunity to invest at first round, and didn't, primarily, really only because the price was twenty million dollars. I remember the conversation where we said it just doesn't fit our fund model. Didn't feel right at the time, and clearly was a big miss for us, but it informed us to not get hung up on price for what we think can be breakout companies, and so one example where we learned and invested at an even higher price was with Square, Jack Dorsey's then new company, and another example would be Roblox. We invested at about an eleven million dollar valuation when we first came in, and then we led around And put in about three million dollars at what was around a forty million dollar valuation, which was very high, but we could see the traction in the revenue, and that, again, it turns out to be one of the best investments that we ever made.

AI assessment note: “it informed us to not get hung up on price for what we think can be breakout companies”

Q I always like to call out the unsung heroes, and then the final one is the favorite story for you from working with Roblox way back from 2007. What's the memorable one that you tell Max about again?

A Yeah, so the first one was with Max in 2011 when we went to the very first Roblox user conference. It was at the Exploratorium, I think it's called in San Francisco, and it was the first chance to see hundreds of Robloxians in person meeting and talking and keynotes, and it was amazing to see it come to life in person, but I'd close with one of the most special experiences was when the company listed a couple of weeks ago, I live in Philadelphia, I drove up I walked to the New York Stock Exchange that morning, and knew Dave was going to be arriving around seven in the morning, and I got there a little early, had a cup of coffee, and I was sitting there just looking up at the Roblox sign on the New York Stock Exchange with a little fearless girl statue right in front of me, and it was quiet and kind of surreal, and then Dave just pulled up in a black SUV with his wife, and I got to give him a high five and a wave and a good luck and thanks, and then he walked in and Did the interview and rang the bell, and it was, uh, you know, in COVID, not everybody can get into the exchange, but it was the surreal, cool, like, almost dreamlike moment to watch him take the company public after 13 years of working with him.

AI assessment note: “first chance to see hundreds of Robloxians in person meeting and talking”

Q In terms of, like, the SPAC, I just have to ask, why do you think too much too soon? I agree with you. I'm just intrigued here.

A I think what we have had in general is a dearth of public companies. The hurdles have been too high. I think I read that We are down to, or we're down to, half of the number of public companies we had a decade or two earlier. That's in the U.S. The rest of the world hasn't slowed down, so just on a relative basis, it's not where you want to be. So it's good that we're finding more ways to get more public companies, but it almost feels like unnaturally fast. If you look at the number of companies that would have on their own found their way to be public ready, that might be one number, but that issue's being forced by The number of SPACs that are out there with a ticking clock that have to find companies to merge with. It just feels like a race that won't end well, or the quality will, by definition, be diminishing over time. Companies that aren't really ready to go public will be dragged out into public, and we'll see how that works. But it just feels like there's a little too much too soon. Maybe that we went from one guardrail of not enough companies and going public To the other guardrail of too many, and we'll come back in the middle somewhere.

AI assessment note: “forced by The number of SPACs that are out there with a ticking clock”

Q In terms of the mechanism of your purview, we mentioned, you know, your role on the board. I do want to ask, how do you think about your own style of board membership today? And then we'll touch on roadblocks in particular.

A I like to be as engaged and partnered and supporting the CEO as I possibly can. I've been a board observer as much as board member over, Many of the companies that I've worked with over 15 years, one of the times that I kind of took pride in, in not making a distinction between observing and being a board member was one of our companies was acquired by Adobe. When we were needing to work on the paperwork, neither the CEO nor I could remember if I was actually a board member or just an observer. And I was an observer, so I didn't have to sign anything, but it just showed that we were acting as if I was the full board member. That's the role I try and play, and I've worked in startups. And in tech companies and pitched VCs as part of the first 20 years in business. So I have that perspective as an operator. I'm a sales and business development guy at heart, and so I bring that perspective. And then as an investor at first round for the last 15 years, I've deployed about a hundred million dollars in about 75 companies. Got to work with dozens and dozens of great founders and kind of shift into that role. So that's what I bring to the table.

AI assessment note: “I like to be as engaged and partnered and supporting the CEO as I possibly can.”

Q I do want to move to Dave and to the team, because, you know, you had an incredible purview with your board seat for many years, and when I spoke to many people before the show about David, everyone describes him as persistent, When you look at him, how has he evolved and developed as a CEO in your mind over the, what is it, 14 years now?

A Yeah, I think the development and even transformation of Dave Buzuki as a CEO, there'll be books written on it. It's the most profound leveling up I've ever seen firsthand. Like, I think there'll be pictures of Jeff Bezos when he was skinny and, you know, young and had hair, and then he's bulked up and walking around Sun Valley Like, before and after, that would be a metaphor in my mind for how, not how Dave looks, but how he's developed personally, how he's been able to lead a team that is absolutely world-class, and even his decision, which is his personal decision to become a public company. There were a few years of board members politely, nicely asking when Dave thought he might be ready to be a public company, and it was always off in the future, and then there was one board meeting where the bit had flipped. And Dave had changed his mind and decided he, uh, wanted to be a public company and a public company CEO, and it was off to the races, and it's been incredible to see him do it. He's built himself up personally through coaching. He's become an expert on interviewing and hiring. Like, when there's an open role, he will interview a dozen of the world's best people at that role in order to find the one that is the right and best fit for Roblox. You're seeing it as he's building out and developing the Board of Directors. It's incredible to watch.

AI assessment note: “It's the most profound leveling up I've ever seen firsthand.”

Q ask, has your style changed? And what I mean by that is a lot of, like, young VCs listen who are adopting board seats for the first time. When you think about advising them or how you've grown and changed as a board member, what would you advise them? And I guess, you know, what would you advise me in terms of being the best board member I can be?

A I think you need to be authentic to what you can bring to the table and what level of engagement you expect to have. And I would suggest more listening and less talking as board members. You know, if I look at all the board members I've seen in action, the number that are really adding value, really trusted partners of the CEO are in a small percentage. I think probably the, maybe the bulk are mostly harmless, or sometimes helpful, and they write checks, and there's some that are just destructive. They're taking meetings in wrong directions, or giving bad advice, or won't shut up. Like, first, don't Destruct value. Maybe you can add value, and maybe you can be somewhere in the middle, and I've seen some new investors or first-time board members try and be too helpful or to push their point of view too hard. I was on a non-profit board that was involved with Peter Drucker, right, the famous management guru. It was based on his teachings. I wasn't in board meetings with him, but before I got there, he was, and they would say Peter would just be in the board meeting for an hour and a half and not say one word, but then Would come in with his one question at the end that would encapsulate everything and drive home what they needed to do, and that's what I would hope to be.

AI assessment note: “I would suggest more listening and less talking as board members.”

Q In terms of, like, the SPAC, I just have to ask, why do you think too much too soon? I agree with you. I'm just intrigued here.

A I think what we have had in general is a dearth of public companies. The hurdles have been too high. I think I read that We are down to, or we're down to, half of the number of public companies we had a decade or two earlier. That's in the U.S. The rest of the world hasn't slowed down, so just on a relative basis, it's not where you want to be. So it's good that we're finding more ways to get more public companies, but it almost feels like unnaturally fast. If you look at the number of companies that would have on their own found their way to be public ready, that might be one number, but that issue's being forced by The number of SPACs that are out there with a ticking clock that have to find companies to merge with. It just feels like a race that won't end well, or the quality will, by definition, be diminishing over time. Companies that aren't really ready to go public will be dragged out into public, and we'll see how that works. But it just feels like there's a little too much too soon. Maybe that we went from one guardrail of not enough companies and going public To the other guardrail of too many, and we'll come back in the middle somewhere.

AI assessment note: “issue's being forced by The number of SPACs that are out there with a ticking clock”

Q I ask a tough one, which is like, when you have companies like Roblox, which do fundamentally change the game in so many ways, how do you prevent past successes or failures influence future decision making in terms of like, you know, gaming platforms now, whenever you meet them being all paved with gold, because you see how good it can be with Roblox. How do you prevent that infiltration?

A Yeah, I think you can use it positively, and you need to be careful to not have it impact you negatively. Like, so I'll give you on the negative side, I work with Josh at Half.com. We were acquired by eBay, so I spent a lot of time in e-commerce, person-to-person e-commerce, and really felt like I knew it very well, and remember, we had the opportunity to look at Etsy, and I was almost dismissive, or I just thought of it as this little niche of handmade goods or something, and I think I was jaded. I mean, I thought I knew so much from eBay that it kind of turned me off to the whole category of what might Take them on. But I would say on the positive side, we're fortunate to be investors in a company called Rec Room, which started out as a pure virtual reality play, but with avatars and shared worlds and building experiences together. I could see early on it had a lot of similarities to Roblox. They have played that out in even a faster level and had some hype along with a lot of substance. To your point about preemptive rounds, Sequoia and Index just led a round that valued that once little company rec room at over a billion dollars, so I would say being in Roblox was helpful for me to see what this next generation VR originally version could be, and they're kind of so far living up to that, so that's what I've learned.

AI assessment note: “I think you can use it positively, and you need to be careful”

Q portfolio and you're like, not sure, but as you said, they're some of the most generational transforming companies that we've had over the last two decades. How do you think about reserves management, given the fact that you have to proactively forecast ahead of time when you don't actually know how the portfolio is going to bake in itself? How do you think about reserves management with that in mind?

A Yeah, I think it's changed over time, and fortunately for us, and our thinking around Roblox was we were making relatively small bets. Our initial investment was 500 K Roblox or so, and that was probably on the high end of an average investment. And we were starting to think about our best companies and opportunities. Where could we put more capital to work? How could we deploy more into the best companies and buy up our ownership? And that's what we were able to do at Roblox. With that extra three million dollars, we were able to almost triple our ownership percentage. And then in subsequent rounds where we didn't participate, were diluted down, but still in the end managed to have over five percent of the company at their direct listing. I think what's shifted over time at first round and in other funds is recognizing you may not have that opportunity to buy up down the road, so you better get your ownership position up front. And so average time to make a decision drops. Average check size and valuation has gone up dramatically. I think that's sort of the game that's being played more is buying more ownership up front with bigger checks.

AI assessment note: “recognizing you may not have that opportunity to buy up down the road”

Q question. You know, another source of liquidity is secondary sales, and I think it was Samuel Shaw that said on the show, early stage funds will have to navigate secondary sales of their positions much more effectively over the coming years. How do you think about secondary sales? I always say, you know, take a third off the table and then ride the upside on two thirds. What's your perspective?

A Yeah, I think that's probably one of the hardest decisions as an investor. With twenty-twenty hindsight, you could look at what you might have done for the best outcome, and I think different firms have different takes on that, different partners inside of funds have different perspectives on that, but if you look at our investments in our two most notable returns with Uber and with Roblox, we had taken some capital off the table along the way at various points, Which made sense and drove great returns relative to that investment, and yet what was left was still enough to return multiples of the fund or even the entire firm. So in that case, we were able to do both.

AI assessment note: “we had taken some capital off the table along the way at various points”

Q ask, has your style changed? And what I mean by that is a lot of, like, young VCs listen who are adopting board seats for the first time. When you think about advising them or how you've grown and changed as a board member, what would you advise them? And I guess, you know, what would you advise me in terms of being the best board member I can be?

A I think you need to be authentic to what you can bring to the table and what level of engagement you expect to have. And I would suggest more listening and less talking as board members. You know, if I look at all the board members I've seen in action, the number that are really adding value, really trusted partners of the CEO are in a small percentage. I think probably the, maybe the bulk are mostly harmless, or sometimes helpful, and they write checks, and there's some that are just destructive. They're taking meetings in wrong directions, or giving bad advice, or won't shut up. Like, first, don't Destruct value. Maybe you can add value, and maybe you can be somewhere in the middle, and I've seen some new investors or first-time board members try and be too helpful or to push their point of view too hard. I was on a non-profit board that was involved with Peter Drucker, right, the famous management guru. It was based on his teachings. I wasn't in board meetings with him, but before I got there, he was, and they would say Peter would just be in the board meeting for an hour and a half and not say one word, but then Would come in with his one question at the end that would encapsulate everything and drive home what they needed to do, and that's what I would hope to be.

AI assessment note: “I would suggest more listening and less talking as board members.”

Q Bill Gurley said on the show that his biggest challenge is the bunny proliferation of capital that we have today and the oversupply of capital. Do you think that the oversupply of capital today has helped you You and FRC more, or hurt you more? And it helps, obviously, in terms of huge amounts to follow on into your companies, and hurt in terms of just 400 seed funds now.

A I would probably say it's a little bit of both. Like, at one point, we were as a full-time institutional seed stage fund back when Josh started it, probably in oh four, oh five, and when I joined in around oh six, there were maybe one or two handfuls of firms that Focused on that. It was a very short list and a pretty unique positioning in the market, and so we were able to see most every deal that would fit our profile and were known in that marketplace. So the challenge is now there's hundreds and hundreds and hundreds of firms that would fit that profile and billions and billions of dollars. The good side of it is that follow-on capital is much more available. The other big change is just that the public markets are open. Roblox is one great example that Bill Gurley is Extremely excited to see that they went out in a direct listing versus an IPO process. He's been railing against mispriced IPOs and dollars left on the table and conflicts of interest in that process forever. And I think Roblox showed what can go right in that process. If you're able to do a direct listing has a lot of benefits. If the company doesn't need the cash and can direct list that works out well. But just the public markets being open to the level that they are today is a phenomenon. I just have a hard time getting my head used to, because most of my investing career, you could have said the IPO marke…

AI assessment note: “I would probably say it's a little bit of both.”

Q Bill Gurley said on the show that his biggest challenge is the bunny proliferation of capital that we have today and the oversupply of capital. Do you think that the oversupply of capital today has helped you You and FRC more, or hurt you more? And it helps, obviously, in terms of huge amounts to follow on into your companies, and hurt in terms of just 400 seed funds now.

A I would probably say it's a little bit of both. Like, at one point, we were as a full-time institutional seed stage fund back when Josh started it, probably in oh four, oh five, and when I joined in around oh six, there were maybe one or two handfuls of firms that Focused on that. It was a very short list and a pretty unique positioning in the market, and so we were able to see most every deal that would fit our profile and were known in that marketplace. So the challenge is now there's hundreds and hundreds and hundreds of firms that would fit that profile and billions and billions of dollars. The good side of it is that follow-on capital is much more available. The other big change is just that the public markets are open. Roblox is one great example that Bill Gurley is Extremely excited to see that they went out in a direct listing versus an IPO process. He's been railing against mispriced IPOs and dollars left on the table and conflicts of interest in that process forever. And I think Roblox showed what can go right in that process. If you're able to do a direct listing has a lot of benefits. If the company doesn't need the cash and can direct list that works out well. But just the public markets being open to the level that they are today is a phenomenon. I just have a hard time getting my head used to, because most of my investing career, you could have said the IPO marke…

AI assessment note: “I would probably say it's a little bit of both.”

Q today, the time in between, as you said that, you know, you said no first, and then you ended up, you know, writing the check, you know, six or eight months later. Today, with so much capital in market, you often just don't have the luxury of being able to have that time to build the relationship. How do you think about relationship building today with such compression around timelines?

A I think some things are different then and now. There was a More time to get to know someone back then than you do now, particularly in a COVID world where things are done in days or weeks over Zoom. And we did miss the first round of Roblox and came in a little bit later in between the next round that we ultimately led and when I joined the board. But I think something that remains true is you can keep a relationship through a no. Even though we passed, it wasn't like that was the one opportunity for a transaction and it either worked or didn't and then If it didn't, we never spoke again. We kept in touch. It was barely a speed bump. Like, Dave acted like it didn't really matter that much that we passed initially, and I was glad and lucky that we had enough of a relationship to keep in conversation, and I think that might have surprised him a little bit and caused him to open up the kimono even more and started showing me his business plan, which I remember distinctly was on version 87 of a company that was less than two years old. And the numbers were just going up and to the right, and my son kept on playing, so we had this unique, unfair advantage to know what was going on, both from financial perspective of a potential investor, but also from a player who was super passionate, and kept the relationship with Dave, was how we managed to get our foot in the door with a first,…

AI assessment note: “something that remains true is you can keep a relationship through a no.”

Q bake of Roblox there. My thinking there is, I totally see you on the slow bake. How do you advise founders then, when it is potentially a slow bake profile company, but they still need to raise funding and generate that hype within VC markets? How does, like, a slow bake company do that efficiently, do you think? And were there any lessons from Roblox's subsequent fundraisings that maybe suggest?

A It is a unique story, but there's certainly lessons to be learned from it. I think Dave Bazzucchi is One of the greatest founders and leaders of our generation, certainly that I've ever personally worked with from a product vision, from seeing that this could be the platform for human co-experience in the metaverse and millions or, you know, eventually hundreds of millions or even billions of people playing and communicating and building together. He's had that vision from day one and really never wavered from it, even in the face of growth being Relatively slow at some times, or certainly linear, and investors just not paying attention. There were a lot of times when the company was missing some numbers, when the company couldn't find hires that would stick and last, when financings didn't come together, and Dave never wavered once. And even to the point when there were acquisition offers for the company, and he knew, he always knew that It could be bigger and better on its own, and he never wavered, and to be honest, I didn't share that conviction all the time. I didn't think it could be as big as it is now, but I think he always did.

AI assessment note: “He's had that vision from day one and really never wavered from it”

Q today, the time in between, as you said that, you know, you said no first, and then you ended up, you know, writing the check, you know, six or eight months later. Today, with so much capital in market, you often just don't have the luxury of being able to have that time to build the relationship. How do you think about relationship building today with such compression around timelines?

A I think some things are different then and now. There was a More time to get to know someone back then than you do now, particularly in a COVID world where things are done in days or weeks over Zoom. And we did miss the first round of Roblox and came in a little bit later in between the next round that we ultimately led and when I joined the board. But I think something that remains true is you can keep a relationship through a no. Even though we passed, it wasn't like that was the one opportunity for a transaction and it either worked or didn't and then If it didn't, we never spoke again. We kept in touch. It was barely a speed bump. Like, Dave acted like it didn't really matter that much that we passed initially, and I was glad and lucky that we had enough of a relationship to keep in conversation, and I think that might have surprised him a little bit and caused him to open up the kimono even more and started showing me his business plan, which I remember distinctly was on version 87 of a company that was less than two years old. And the numbers were just going up and to the right, and my son kept on playing, so we had this unique, unfair advantage to know what was going on, both from financial perspective of a potential investor, but also from a player who was super passionate, and kept the relationship with Dave, was how we managed to get our foot in the door with a first,…

AI assessment note: “something that remains true is you can keep a relationship through a no”

Q bake of Roblox there. My thinking there is, I totally see you on the slow bake. How do you advise founders then, when it is potentially a slow bake profile company, but they still need to raise funding and generate that hype within VC markets? How does, like, a slow bake company do that efficiently, do you think? And were there any lessons from Roblox's subsequent fundraisings that maybe suggest?

A It is a unique story, but there's certainly lessons to be learned from it. I think Dave Bazzucchi is One of the greatest founders and leaders of our generation, certainly that I've ever personally worked with from a product vision, from seeing that this could be the platform for human co-experience in the metaverse and millions or, you know, eventually hundreds of millions or even billions of people playing and communicating and building together. He's had that vision from day one and really never wavered from it, even in the face of growth being Relatively slow at some times, or certainly linear, and investors just not paying attention. There were a lot of times when the company was missing some numbers, when the company couldn't find hires that would stick and last, when financings didn't come together, and Dave never wavered once. And even to the point when there were acquisition offers for the company, and he knew, he always knew that It could be bigger and better on its own, and he never wavered, and to be honest, I didn't share that conviction all the time. I didn't think it could be as big as it is now, but I think he always did.

AI assessment note: “investors just not paying attention... Dave never wavered once”