The Exchanges

Q then say, okay, we're gonna put twenty five million, say, I'm just taking, like, you know, 20%, 25% carry, same thing in terms of, like, the invested capital that will go back to you. Do you take twenty million of your own money and say, great, this is our budget, and that's the same as a hundred million dollar fund? How did you do resource allocation on the initial budget?

A Yeah. So here's the way that we thought of it. Like Asatja said, we sort of had this notion, what we, the choice that we made last year was something that we sort of had in this glass case that originally was going to say like break glass in 2030, right? Like, so we had thought about this and all we really did was break glass, you know, eight years earlier. We'll see if it was premature or not. And Asatja talked about a little bit, you know, one of the reasons for doing that was trying to think about what, you know, fund size and did we want to get bigger, which was always a non-goal. When we then did sort of the bottoms up question of like, well, okay, how do we budget for this? We sort of decided that, you know, nominally let's assume the same investment cadence, 10 to 12 investments a year. Whereas before maybe we had an ownership, uh, goal of 10 to 15%, and that's an average check size of, you know, one and a half, you know, a million dollars or whatever, and, and held reserves that, you know, we wouldn't necessarily have an ownership target. We wouldn't necessarily hold reserves. Where do we think we fit in nicely on a cap table, you know, at a seed A or B that we want to work at? Um, well, let's just nominally say that, you know, our check size is going to be between a hundred K and 500 K. And indeed in 10 of the 11 investments we made in 20, 22, it was within that range.…

AI assessment note: “what's 10 to 12 investments a year, time a hundred to 500 K”

Q Kieran, who does pre-seed investing for me, and I always say to him, I will never block you doing a deal. If you want to do a deal, and I don't want to do it, you can do it, because I don't want to lose the outliers. Were you not concerned that actually you would lose the outliers with the consensus decision making that you both had to love it?

A So, you know, Sacha came from, you know, or had previous larger fund experience where he had exposure to what happens in sort of voting dynamics, structure, consensus, non-consensus, in a large room, and I, I almost certainly think that if there were three or more of us, consensus would be You know, a foolish goal, uh, wouldn't serve us or the founders well. I think, though, and this is something we, you know, continue to, or have interrogated over time, like, do we need a silver bullet? Do we need this? Do we need that? When we look at the benefit of consensus, um, we think it does a few things. First, it, um, from the get-go, unites us against an entrepreneur, you know, against an opportunity. And it's never, the consensus is never Um, well, you like this and I like you, so why don't we do it? We can have different degrees of certainty, different degrees of enthusiasm, see it in slightly different ways, but we both have to be, you know, sort of above the yes threshold. The next thing it does, I think, is it unifies and solidifies the relationship with the founders. It's not Satya wanted to do this deal and Hunter was skeptical. It's you're taking money from homebrew. You're not taking money from a GP at the, at the firm. We look back And we've struggled over 10 years to find an occasion where lack of, you know, if there was lack of consensus, it meant we didn't do the deal. A…

AI assessment note: “I don't think we have any, you know, quote unquote outliers, um, that were, you know, false negatives”

Q Final, final one, I promise. Does money make you happy? I would say that it's removed so much pressure and stress from your relationship that it's given you the foundations of a truly beautiful relationship, which is great. But, you know, I've been in partnerships before where You both need cash, and it puts strain and pressure on every day. Um, does money make you happy?

A For me, it's been a step function. I grew up downwardly mobile. I started out like zero through 10, upper middle class, and then, then middle class from there. So I got to see what it was like to sort of be around things I wanted, but not be able to have them. And so the chance to, through my experience at, at Google and, you know, um, what we've been able to do at homebrew so far, my chance to get to a point of stability where I know I'll be okay. Um, like I can pay for my daughter's school. I can, you know, Pay my mortgage, all that type of stuff. And, you know, um, has relieved a lot of stress and allowed me to focus on, um, what also makes me happy. There's probably a next bump up where like, look, I'm the, I'm the, I'm the strange VC who only owns one house. Um, like there's another bump up where like, oh, Hey, you know, getting a Pieta Terre in New York would make me happy. That's where I'm from. Like, I'd love my daughter to have a set of keys there, you know, that type of thing. And fortunately I think we're on the path like to that. But, um, I wouldn't, I wouldn't optimize, I wouldn't optimize for getting there, and I, and once I get there, I'm not sure there's another step function that, that like, is a goal that I'd shoot for. I've always sort of said, like, if I became really, really wealthy at any point, it would be sort of a byproduct of something else, not, not, …

AI assessment note: “relieved a lot of stress and allowed me to focus on, um, what also makes me happy.”

Q attribution. I, I'm totally with you. I like not having deal attribution, but LPs do love it, and I know obviously you don't have LPs now, and we're going to get to that, but how did you get around that with LPs who are like, no, no, no, we want partner attribution on deals, and that's not always possible for a lot of funds. How do you think about that?

A I think first, Harry, it started with actually LP selection. When we were raising, we've been institutional forever. Uh, we started with the idea, we can talk about why, but we started with the idea that we wanted A small group of high quality investors who are committed to venture and hold us accountable to producing, you know, not just average returns, but returns as good as the great, you know, funds that they already had in their portfolio. The self-selecting group we ended up with at the time, this was 2013. We got introduced to a bunch of institutional LPs by our friends at, you know, the first generation of seed funds. Um, Chris Saka, Josh Koppelman, Michael Deering, that type of stuff. The LPs we ended up with were all LPs who were excited about equal partnerships. The ones who passed on us were ones that wanted a single key mat, like this notion of, well, it's great to have multiple GPs, but at funds under a hundred million dollars, we really like to see one person in charge, Steve Anderson, Michael Deering, you know, Chris Saka, you know, uh, Jeff Clavier, right. And so the people who I think were really concerned about deal attribution and one person starts, you know, uh, uh, you know, pilots of the ship, that type of stuff, like. They didn't invest in us. Like the people who invested in us were ones who were perfectly happy to believe that like homebrew is going to …

AI assessment note: “it started with actually LP selection... The people who I think were really concerned... didn't invest”

Q But I do, I do want to start with, with my favorite question. And it's how did you make your move into what I call the wonderful world of VC?

A Sure. I guess for me, it was really two things coming together. The first was at a point in my career where I created some headspace for myself of, Hey, maybe one day instead of doing, I'll be helping. Whereas I define doing as spending about 12 years in various product management leadership roles and sort of being on the operating side of the house. Figuring that at some point I would want to, as opposed to betting on my ideas and enabling my team's ideas, help others accomplish building something to the fidelity that they saw in their head. I didn't know if that necessarily meant investing or not, but I started to at least imagine that I could be on the other side of the table. Then I, you know, and this is really the origin story of homebrew itself. My partner, Satya Patel, who you've had on before, he and I had worked together at Google, had always wanted to work together again. And there was Just a little bit of serendipity of him leaving the product leadership role at Twitter in the second half of 2012, at a point at which I'd been thinking about, uh, potentially leaving Google and YouTube after nine years there. So we didn't start out right away by saying, hey, let's raise a seed fund. Everybody seems to be doing it. Uh, we really started out more with a commitment to start to think about what it would be like to work together, and Homebrew came out of that.

AI assessment note: “it was really two things coming together... Homebrew came out of that.”

Q Final, final one, I promise. Does money make you happy? I would say that it's removed so much pressure and stress from your relationship that it's given you the foundations of a truly beautiful relationship, which is great. But, you know, I've been in partnerships before where You both need cash, and it puts strain and pressure on every day. Um, does money make you happy?

A For me, it's been a step function. I grew up downwardly mobile. I started out like zero through 10, upper middle class, and then, then middle class from there. So I got to see what it was like to sort of be around things I wanted, but not be able to have them. And so the chance to, through my experience at, at Google and, you know, um, what we've been able to do at homebrew so far, my chance to get to a point of stability where I know I'll be okay. Um, like I can pay for my daughter's school. I can, you know, Pay my mortgage, all that type of stuff. And, you know, um, has relieved a lot of stress and allowed me to focus on, um, what also makes me happy. There's probably a next bump up where like, look, I'm the, I'm the, I'm the strange VC who only owns one house. Um, like there's another bump up where like, oh, Hey, you know, getting a Pieta Terre in New York would make me happy. That's where I'm from. Like, I'd love my daughter to have a set of keys there, you know, that type of thing. And fortunately I think we're on the path like to that. But, um, I wouldn't, I wouldn't optimize, I wouldn't optimize for getting there, and I, and once I get there, I'm not sure there's another step function that, that like, is a goal that I'd shoot for. I've always sort of said, like, if I became really, really wealthy at any point, it would be sort of a byproduct of something else, not, not, …

AI assessment note: “relieved a lot of stress and allowed me to focus on, um, what also makes me happy.”

Q attribution. I, I'm totally with you. I like not having deal attribution, but LPs do love it, and I know obviously you don't have LPs now, and we're going to get to that, but how did you get around that with LPs who are like, no, no, no, we want partner attribution on deals, and that's not always possible for a lot of funds. How do you think about that?

A I think first, Harry, it started with actually LP selection. When we were raising, we've been institutional forever. Uh, we started with the idea, we can talk about why, but we started with the idea that we wanted A small group of high quality investors who are committed to venture and hold us accountable to producing, you know, not just average returns, but returns as good as the great, you know, funds that they already had in their portfolio. The self-selecting group we ended up with at the time, this was 2013. We got introduced to a bunch of institutional LPs by our friends at, you know, the first generation of seed funds. Um, Chris Saka, Josh Koppelman, Michael Deering, that type of stuff. The LPs we ended up with were all LPs who were excited about equal partnerships. The ones who passed on us were ones that wanted a single key mat, like this notion of, well, it's great to have multiple GPs, but at funds under a hundred million dollars, we really like to see one person in charge, Steve Anderson, Michael Deering, you know, Chris Saka, you know, uh, Jeff Clavier, right. And so the people who I think were really concerned about deal attribution and one person starts, you know, uh, uh, you know, pilots of the ship, that type of stuff, like. They didn't invest in us. Like the people who invested in us were ones who were perfectly happy to believe that like homebrew is going to …

AI assessment note: “The people who were really concerned about deal attribution... didn't invest in us.”

Q You spoke there about kind of the financials and the personal financials, which we all kind of like shy away from. I mean, incredibly British of all of us, but how should founders and VCs then talk about personal money, do you think, to each other?

A Well, look, I think not surprisingly, you know, when we were, you know, executing for that first decade, our, you know, sort of seed lead investor model, like talking to founder, you know, we were the sort of first or second largest, you know, shareholder for those first three to five years most of the time. And we had, like, lots of conversations with founders about, um, Wanting to make sure that they were in a situation, um, that they could focus fully on the business. Um, sometimes that meant salary bumps. Sometimes that meant a little bit of early secondary. It didn't mean winning ahead of the business. It didn't mean taking advantage of hot markets to cash out ahead of your team or investors, but it did mean like going, you know, if you just raised, you know, a twenty million dollar a round, but yet you're still living in a three bedroom apartment, um, because you're, you know, student loan heavy cash poor. Well, let's figure out how to solve that problem for you. So you can like move into a place that you can actually work out of, you know, without worrying about whether your roommate is drunk and focus on your business and like creating space to see, you know, such a talked about seeing each other as people and how important that was to our partnership. I mean, I think that's the same thing when it comes to founders, um, trying to see them as people and understand that, …

AI assessment note: “de-stress founders in a way that will increase the probability of a wonderful outcome”

Q You spoke there about kind of the financials and the personal financials, which we all kind of like shy away from. I mean, incredibly British of all of us, but how should founders and VCs then talk about personal money, do you think, to each other?

A Well, look, I think not surprisingly, you know, when we were, you know, executing for that first decade, our, you know, sort of seed lead investor model, like talking to founder, you know, we were the sort of first or second largest, you know, shareholder for those first three to five years most of the time. And we had, like, lots of conversations with founders about, um, Wanting to make sure that they were in a situation, um, that they could focus fully on the business. Um, sometimes that meant salary bumps. Sometimes that meant a little bit of early secondary. It didn't mean winning ahead of the business. It didn't mean taking advantage of hot markets to cash out ahead of your team or investors, but it did mean like going, you know, if you just raised, you know, a twenty million dollar a round, but yet you're still living in a three bedroom apartment, um, because you're, you know, student loan heavy cash poor. Well, let's figure out how to solve that problem for you. So you can like move into a place that you can actually work out of, you know, without worrying about whether your roommate is drunk and focus on your business and like creating space to see, you know, such a talked about seeing each other as people and how important that was to our partnership. I mean, I think that's the same thing when it comes to founders, um, trying to see them as people and understand that, …

AI assessment note: “we had, like, lots of conversations with founders about... Wanting to make sure”

Q with me, but I was too young. Um, anyway, I, I, I have to ask just quickly on the landscape today, and then I promise to do a quick fire. This is fucking terrifying for a generation of investors that haven't seen a downturn. Um, how do you analyze where we're at today? Will this get worse? How do you predict the next 24 months playing for the early stage?

A I think it'll get worse for series A through D companies that can't remain, you know, sort of like default investable. I thought, you know, David Sacks wrote a very smart blog post, um, last summer or last spring at a point at which some of the common wisdom was like, for every company, make sure you have three years of cash and so forth. And, and like, I don't think those are uniformly smart recommendations to make for venture backed companies that are Relying upon, uh, a next financing. What you have to prove is that you have an, you know, inside an opportunity in a market that's large enough to where if you do your job, build your product, get to market, and exploit that opportunity, you're going to create enterprise value that's worth, um, a new investor coming into your company. Um, it's true that the dynamics around that equation have changed, reverted to the norm, maybe even, you know, a little bit pessimistic right now. But that means continuing to execute against a plan. Smart growth. Not growth at any cost, but smart growth. And I think we have too many companies that, um, have been encumbered by, um, capital ahead of product market fit and don't know how to find product market fit. Too many companies where their culture and their attitude. Wait, no, let me finish. Let me finish, Eric. Too many companies that are Encumbered, um, by a culture, um, and an employee base …

AI assessment note: “I think it'll get worse for series A through D companies that can't remain”

Q It's not even like a founder collective, like we're staying disciplined. It's like, we actually, we just, we just don't need it at all. I think it's just like, what? But I'm, I'm just like, I'm, I'm confused. So do you not, like, do you become less price sensitive with this shift?

A Yeah. So we become, what, what I think is we become price agnostic as it comes and, and turns agnostic when you think about how much do we own, right? Like we're, we're not doing that math. We don't change our model, our discipline, our thinking on the question about the way this company is being financed. Is that, um, a help or a hindrance to its ability to get a future financing done? To create upside for shareholders, so on and so forth, right? So it's still an opera. It's, you know, both, both in absolute terms and then an opportunity cost terms. Where are we going to invest? It's not that, you know, oh yeah. Hey, we, now we do uncapped notes or we do seeds at, you know, a hundred million pre or whatever, because who cares? It's our money, not somebody else's. We care a lot about, maybe we can't, you know, we care more in these cases about who the lead investor is in the, Who the lead investor is in the rounds we're joining because it's not us, right? We used to not care who the other investors were. We're like, we're going to help you and we'll get other people great around us. Now we actually care about quality, you know, of the lead investor. We care about whether somebody is pricing themselves to perfection. You know, we care about, um, whether they're adding new pockets around the table versus just drawing down the last check, you know, from, uh, you know, investors al…

AI assessment note: “yes, we are less price sensitive in a computational manner, but not less price sensitive”

Q that, you know, multi-stage funds, and they're like, fuck, Harry, you've got these big-ass funds. How are we going to spend them this year? There's no flow. I've got nothing now, Harry. Do you have anything? I'm like, I got nothing. Um, and everyone feels the pressure to deploy. Did you feel the pressure to deploy, honestly, when you had Homebrew? And, like, do you, is that very different now?

A I, I never felt, felt like we had the, felt the pressure to deploy, but I feel like one of the reasons we made the switch early was we were questioning the, we were questioning the looking forward strategy of raising a large fund, a potentially even larger fund, without confidence that our Um, that we wanted to execute the same strategy for the next three, five, seven, 10 years, right? So it was going to be tail wagging the dog a little bit. We knew we could be successful doing it. We didn't know if we could be happy doing it. I think that's important to point out. It wasn't so much that like raising 203 hundred million dollars, you know, like some of our peers and going to market in a model where we brought on another GP, we expanded our team, we brought on another platform person. Like, I actually think we could, you know, Hit exceed our benchmarks and be perfectly fine in market. I think it would have forced more and more time and energy and choices that would have sacrificed happiness for success. We would have spent more time on internal operations, hiring and managing a team rather than with one another and with founders. We would have, um, I think whether people want to admit it or not, you're, you know, as you know, I think, uh, what I think You know, people attribute this to Mike Maple's affiliate and it's a hundred percent true. Like your fund size is your strategy, r…

AI assessment note: “I never felt like we had the felt the pressure to deploy”

Q But I do, I do want to start with, with my favorite question. And it's how did you make your move into what I call the wonderful world of VC?

A Sure. I guess for me, it was really two things coming together. The first was at a point in my career where I created some headspace for myself of, Hey, maybe one day instead of doing, I'll be helping. Whereas I define doing as spending about 12 years in various product management leadership roles and sort of being on the operating side of the house. Figuring that at some point I would want to, as opposed to betting on my ideas and enabling my team's ideas, help others accomplish building something to the fidelity that they saw in their head. I didn't know if that necessarily meant investing or not, but I started to at least imagine that I could be on the other side of the table. Then I, you know, and this is really the origin story of homebrew itself. My partner, Satya Patel, who you've had on before, he and I had worked together at Google, had always wanted to work together again. And there was Just a little bit of serendipity of him leaving the product leadership role at Twitter in the second half of 2012, at a point at which I'd been thinking about, uh, potentially leaving Google and YouTube after nine years there. So we didn't start out right away by saying, hey, let's raise a seed fund. Everybody seems to be doing it. Uh, we really started out more with a commitment to start to think about what it would be like to work together, and Homebrew came out of that.

AI assessment note: “Homebrew came out of that.”

Q show, and I crowdsource questions for you, and one very common reoccurring one was, was Speaking about you before your reputation as, as now Hunter Hall homebrew, uh, and a lot of people asked, how did you win deals before the reputation and the 125,000 Twitter followers? Was it the empathy and the care? What was it that allowed you to build the brilliant brand that you have around yourself?

A Well, thanks. I, I don't, you know, I don't think of us as yet having a brand that, you know, we've fully grown into because I think we're only four years in. Satya and I had the chance to, I guess, hit the ground running in some respects, having had 10 to 15 years of operating experience in the Valley, Satya having been a venture capitalist before, and Homebrews, because we got to start with a blank sheet of paper, we really got to start with a set of values and a strategy, more so than having to worry about what our positioning looked like vis-a-vis other venture capitalists or Trying to take something that had a 10, 20, 30 year legacy and retrofit it into what we thought seed stage entrepreneurs needed today. So if anything, I guess it's just a certain degree of accessibility, transparency, and honesty about who we are. But I don't think it was a, you know, I think it would have been much harder for us if we, you know, sprung forth without that particular operating history or reputation. Because most of the, you know, at the seed stage, deal flow is more, I think, about what I'd call sort of dark deal flow. Deals that don't get seen outside of a handful of funds than necessarily 50 funds all fighting over and tracking the same company. And so we had enough of a set of relationships, people who we worked with, who worked for us, other co-investors who thought we'd be good add…

AI assessment note: “we had enough of a set of relationships... to quickly start with healthy deal flow”

Q I'm, I'm super intrigued. You said there about the kind of a movement art funnel there, and, and that does bring me to an interesting question that, particularly for you at the seed stage, is how much of a role does, The Series A crunch that we hear so much about play in your life. Is it a very prominent feature for you in the progression of your companies upstream?

A I tend to be on the side that there is no Series A crunch in the sense that I have yet to find a company that I thought should be able to raise a Series A fail to do so. It does sometimes mean that the milestones they thought they needed to hit when they raised their initial seed round are Have not yet accomplished, and so they need to top off or get a little bit further. But, you know, one of the real conversations we have with our companies as we get to know them post-investment is, what milestones do you need to hit in order to better understand your business, start to de-risk it, and be able to tell that story to the next round of investors? And what I'll say, at least through first fund and, you know, starting to get halfway through our second fund, is when we and our founders agree on those milestones and they hit those milestones, None of them have had problems raising an A round. Some of them have raised, you know, second seeds, bridges, seed pluses, whatever you want to call them in order to get to those milestones. But I just think it's more a factor of the explosion in the number of seed companies and the fact that thus, especially for A round investors, you really get to look at these companies and pick which ones you think have the momentum, the legs to be able to build a venture scale company. So for me, there's definitely

AI assessment note: “I tend to be on the side that there is no Series A crunch”

Q not always applicable or widely applied to the VC ecosystem. And so I do want to finish today on, on an element of what would you like to see change in, in the kind of next wave of VC, uh, with, with newly operational minted VCs, uh, hopefully entering the industry. Um, so how would you like to see the VC ecosystem change over the next five to 10 years?

A I'd like to see the venture community continue to embody values, the values that we want the technology community as a whole to persist. And so one of the reasons we're named homebrew is a nod back to the homebrew computer club of the late seventies and eighties. It was where a group of PC enthusiasts used to meet on Stanford's campus in the early days of the personal computer, um, to just shoot the shit and talk about stuff. I was where Steve jobs and Steve Wozniak met a bunch of other Hardware startups came out of that, and so we try to make sure that we're growing the pie, not just taking our share of it. I think that holds true within the technology community itself, and sort of paying in, giving before you get, but I also think it pans out when we're talking about technology's role within the world as a whole, and especially as we move from industrial capitalism to technology-driven capitalism. What's our role within society, within government, and within community? I think seeing more and more people make sure that they're Giving before they get, not just by holding office hours for entrepreneurs, but by getting involved in politics, by putting their capital behind NGOs, nonprofits, diversity efforts. There's been a movement towards, you know, sort of VCs positioning themselves as all knowing masters of the universe, read this blog post. I think that's all fine, but if yo…

AI assessment note: “I'd like to see the venture community continue to embody values”

Q and we progress into that murky patch, seed plus, bridge, you know, seed A, whatever we want to call it, what I'd love to know from you is how you view this round. Is it simply a sign that product market fit hasn't been achieved, or is it simply an indication that maybe they just need a bit more runway? How do you view this, this kind of gap round?

A You know, I should say that we've participated in one or two of them in terms of a point of entry, so we typically will try to be the first institutional money in just because we love working with these companies from as early as possible, but we'll occasionally, and we see lots of opportunities to, you know, sort of enter in in a meaningful way as they gear up to raise a second seed or a bridge, and we'll look at those, but it's, you know, it's always best, I think, for us to start as early as possible. When I look at them, I try to understand which scenario It is. Is it a case of smart people, smart team, but they're still kind of wandering in the desert. They haven't figured out exactly how to scale. They haven't tested and learned from their hypotheses and they might look great on paper. They're, you know, smart team in an interesting market, but you know what their speed of learning, their rate of learning hasn't necessarily quickened and they're not, uh, they don't have the momentum to head in the right direction. I think those are harder as an investor who might be following on or trying to attract new investors. I think those are harder bets to make. If it's one of two other scenarios, one where the curve and the momentum and the growth is correct, it just took them a little bit longer to start on that curve. I think those are backable. And certainly if a team could go …

AI assessment note: “When I look at them, I try to understand which scenario It is.”

Q was the most important trait he can look for in a founder. I've just edited another show where they say the most important trait is the chip on the shoulder of the founder. I'm intrigued. You know, you don't have to choose either two. You can choose either one, but in which kind of trait are you most aligned with and get excited by when you see in a founder?

A That's a great question. I mean, at the stage we invest, right, it's team, team market. So we're always interested in getting to know the people. Sometimes we've known them for years. Sometimes we've known them for months, you know, but sometimes it's a process of just over the course of a few weeks. I think if Satya and I had to make a decision about any one quality that was present or not present in terms of impacting a investment decision, it would probably be something around founder market Or the why, why are they building this company? We tend to really get excited about people who are bringing a degree of passion, conviction, a missionary zeal towards their company building process, both in the problem they're trying to solve and in their desire to think of their company as really their first product and being intentional about how they're building it. I think that's the quality that makes us the best match for a founding team. Mm-hmm. Um, and hopefully vice versa. What's great about our model with homebrew, staying relatively small and concentrated at seed stages, we're ultimately judged by the investments we do, not the investments we don't do. So we don't have to be the right partner for every talented founder, so long as we're making a set of six, seven, eight, nine investments each year that will ultimately turn into some number of meaningful, viable, transformative…

AI assessment note: “it would probably be something around founder market Or the why”

Q And then final question before the quick follow, I have to ask this. You said about the kind of, uh, capitalism and moving to, to the next world. I'm intrigued to ask in terms of income inequality, and do you think the advancement of tech and the kind of exponential progression of deep tech that we're seeing Will worsen or will help income inequality in the future?

A I think I'm a technology optimist. I believe technology will, if it can grow as quickly as we have the opportunity to allow these advancements to occur, it will continue to expand the pie, and then it's our job to work with private sector government to help figure out how to deal with distribution and redistribution of that pie, and so my hope is that we allow Technology to grow relatively unfettered, but realize that the trade-off for allowing that transformation to occur in a, you know, fast velocity is that in any transformation, there are inequalities. There are people in society who need assistance through those transformations, and we should be willing to pay in with capital, with sweat, and with time into ensuring that those folks don't get left behind. So I, I fear slowing down economic And technical transformation, um, because we are afraid of that disruption. But I also fear blindly rushing into this transformation without any consideration for how to support those members of our society too that see the world changing under their feet and need a little bit of assistance through that transformation.

AI assessment note: “in any transformation, there are inequalities. There are people in society who need assistance”

Q And what's the biggest challenge you have day to day with Homebrew Day?

A I think right now it's the fact that, you know, we've hit the ground running, we're really proud of what we've accomplished so far, but we Are going to be in that period coming into fund three in 2018, where we want to start being able to raise our funds off of how homebrew is doing and not just our reputation or what we were able to do before homebrew. So it's managing the fact that a lot of these companies are still early stage and are going to be growing as private companies for a long period of time with wanting to put, you know, tangible runs on the board for our investors and show that we're good, responsible managers of their money. Fortunately, our LP base is institutional and in other venture funds, so they know it takes a while, and they want us to, you know, sort of continue to grow large plants, not harvest them prematurely. But, you know, I have a real urgency to prove that we are good, worthy holders of their capital.

AI assessment note: “managing the fact that a lot of these companies are still early stage”

Q What's the vision for Homebrew? Is it a one billion mega fund when you return 10 X on four continuous funds?

A You know, we talk about this going into each, each fundraise, but our defaults Are usually switched to the same as the previous fund. So we want to stay, we're in sort of year four of a 20 year roadmap. We want to stay focused on early stage companies that we can put not just capital, but time behind. So it means a relatively concentrated investment philosophy. And, you know, we want our legacy to be the companies that we worked with over five or six funds, not necessarily something that's intergenerational or lives on beyond us. But, um, You know, like I said, it's still early. It's year four of, you know, what could be 20 years. So we, we reserve the right to change our mind.

AI assessment note: “our defaults Are usually switched to the same as the previous fund.”

Q then say, okay, we're gonna put twenty five million, say, I'm just taking, like, you know, 20%, 25% carry, same thing in terms of, like, the invested capital that will go back to you. Do you take twenty million of your own money and say, great, this is our budget, and that's the same as a hundred million dollar fund? How did you do resource allocation on the initial budget?

A Yeah. So here's the way that we thought of it. Like Asatja said, we sort of had this notion, what we, the choice that we made last year was something that we sort of had in this glass case that originally was going to say like break glass in 2030, right? Like, so we had thought about this and all we really did was break glass, you know, eight years earlier. We'll see if it was premature or not. And Asatja talked about a little bit, you know, one of the reasons for doing that was trying to think about what, you know, fund size and did we want to get bigger, which was always a non-goal. When we then did sort of the bottoms up question of like, well, okay, how do we budget for this? We sort of decided that, you know, nominally let's assume the same investment cadence, 10 to 12 investments a year. Whereas before maybe we had an ownership, uh, goal of 10 to 15%, and that's an average check size of, you know, one and a half, you know, a million dollars or whatever, and, and held reserves that, you know, we wouldn't necessarily have an ownership target. We wouldn't necessarily hold reserves. Where do we think we fit in nicely on a cap table, you know, at a seed A or B that we want to work at? Um, well, let's just nominally say that, you know, our check size is going to be between a hundred K and 500 K. And indeed in 10 of the 11 investments we made in 20, 22, it was within that range.…

AI assessment note: “What's 10 to 12 investments a year, time a hundred to 500 K, no reserve”

Q And then finally, what's the most recent publicly announced investment and why did you say yes?

A You know, it's interesting in our second fund, most of the companies, even those that are operating haven't yet been publicly announced. Uh, I think it's a mixture of sort of announcing your seed is almost the start of your series a fundraising these days in terms of inbound and also a bunch of folks who aren't necessarily consumer focused apps or even located in the Bay area. So that they just want to grow without attracting attention. But one that was recently announced was a company called joy mode out of Los Angeles. It's Joe Fernandez who started cloud. It's his next company. And it's really a, it's a membership based service that allows you to own less and do more. So essentially families, couples, singles who want to, for example, let's say throw a movie night in their backyard. You just open the joy mode app and it'll bring over You know, six beanbags, a projector, a screen, a popcorn machine, and a bunch of other stuff. And that ranges from, you know, things you can do with groups to things you can do by yourself. And it's part of Joe's notion that we're all going to spend less money on ownership and more money on experiences. I mean, he's such a great founder for this and that we led that seed round, I guess, um, early 2015, spring 20 15. And it just sort of got announced after they'd been working stealthily and in beta and under different Brand names in LA for the pa…

AI assessment note: “one that was recently announced was a company called joy mode out of Los Angeles”

Q And then finally, what's the most recent publicly announced investment and why did you say yes?

A You know, it's interesting in our second fund, most of the companies, even those that are operating haven't yet been publicly announced. Uh, I think it's a mixture of sort of announcing your seed is almost the start of your series a fundraising these days in terms of inbound and also a bunch of folks who aren't necessarily consumer focused apps or even located in the Bay area. So that they just want to grow without attracting attention. But one that was recently announced was a company called joy mode out of Los Angeles. It's Joe Fernandez who started cloud. It's his next company. And it's really a, it's a membership based service that allows you to own less and do more. So essentially families, couples, singles who want to, for example, let's say throw a movie night in their backyard. You just open the joy mode app and it'll bring over You know, six beanbags, a projector, a screen, a popcorn machine, and a bunch of other stuff. And that ranges from, you know, things you can do with groups to things you can do by yourself. And it's part of Joe's notion that we're all going to spend less money on ownership and more money on experiences. I mean, he's such a great founder for this and that we led that seed round, I guess, um, early 2015, spring 20 15. And it just sort of got announced after they'd been working stealthily and in beta and under different Brand names in LA for the pa…

AI assessment note: “one that was recently announced was a company called joy mode out of Los Angeles.”

Q Kieran, who does pre-seed investing for me, and I always say to him, I will never block you doing a deal. If you want to do a deal, and I don't want to do it, you can do it, because I don't want to lose the outliers. Were you not concerned that actually you would lose the outliers with the consensus decision making that you both had to love it?

A So, you know, Sacha came from, you know, or had previous larger fund experience where he had exposure to what happens in sort of voting dynamics, structure, consensus, non-consensus, in a large room, and I, I almost certainly think that if there were three or more of us, consensus would be You know, a foolish goal, uh, wouldn't serve us or the founders well. I think, though, and this is something we, you know, continue to, or have interrogated over time, like, do we need a silver bullet? Do we need this? Do we need that? When we look at the benefit of consensus, um, we think it does a few things. First, it, um, from the get-go, unites us against an entrepreneur, you know, against an opportunity. And it's never, the consensus is never Um, well, you like this and I like you, so why don't we do it? We can have different degrees of certainty, different degrees of enthusiasm, see it in slightly different ways, but we both have to be, you know, sort of above the yes threshold. The next thing it does, I think, is it unifies and solidifies the relationship with the founders. It's not Satya wanted to do this deal and Hunter was skeptical. It's you're taking money from homebrew. You're not taking money from a GP at the, at the firm. We look back And we've struggled over 10 years to find an occasion where lack of, you know, if there was lack of consensus, it meant we didn't do the deal. A…

AI assessment note: “I don't think we have any, you know, quote unquote outliers, um, that were”

Q show, and I crowdsource questions for you, and one very common reoccurring one was, was Speaking about you before your reputation as, as now Hunter Hall homebrew, uh, and a lot of people asked, how did you win deals before the reputation and the 125,000 Twitter followers? Was it the empathy and the care? What was it that allowed you to build the brilliant brand that you have around yourself?

A Well, thanks. I, I don't, you know, I don't think of us as yet having a brand that, you know, we've fully grown into because I think we're only four years in. Satya and I had the chance to, I guess, hit the ground running in some respects, having had 10 to 15 years of operating experience in the Valley, Satya having been a venture capitalist before, and Homebrews, because we got to start with a blank sheet of paper, we really got to start with a set of values and a strategy, more so than having to worry about what our positioning looked like vis-a-vis other venture capitalists or Trying to take something that had a 10, 20, 30 year legacy and retrofit it into what we thought seed stage entrepreneurs needed today. So if anything, I guess it's just a certain degree of accessibility, transparency, and honesty about who we are. But I don't think it was a, you know, I think it would have been much harder for us if we, you know, sprung forth without that particular operating history or reputation. Because most of the, you know, at the seed stage, deal flow is more, I think, about what I'd call sort of dark deal flow. Deals that don't get seen outside of a handful of funds than necessarily 50 funds all fighting over and tracking the same company. And so we had enough of a set of relationships, people who we worked with, who worked for us, other co-investors who thought we'd be good add…

AI assessment note: “we had enough of a set of relationships... to quickly start with healthy deal flow”

Q Can you put your arms down? Sorry, it's Robbie again.

A Oh, sorry. Sorry. I'm posing. I'm, I'm flexing. I'm flexing globally and physically on you. Um, the, uh, but the, um, but if we've seen, if we've seen sort of decreased deal flow anywhere, um, it's actually in sort of the things we look more similar to now. And I don't think it's competitive. Like, I don't, I mean, I don't know. I don't feel competitive, you know, but I think it's just more pragmatic. It's like they have, you know, they have a goal to get to, to find, to find leads. And what's funny for us is it's flipped a little bit because we can still be first person to commit to around and we can form an institutional around, you know, around us in a second. Right. So like we still have the relationships and credibility that if you're trying to raise four million dollars and we only want to do two 50, given our new model, you know, We can find you that other, you know, 3.75 million, you know, within a week.

AI assessment note: “Oh, sorry. Sorry. I'm posing. I'm, I'm flexing.”