The Exchanges

Q pretty contrarian and radical elements there in the way I think we view business and have been business for so long. I'm intrigued because you've also stated that now is the time to be deep tech investing. So let's stay on this contrarian theme because I love contrarian themes. So what is it about the market conditions now that mean now's the right time to be a deep tech investor?

A I would say there are a couple things that we're seeing. So first, It seems to be increasingly difficult to compete with the Googles and the Facebooks and the Amazon on sort of pure SaaS place, right? They have incredible network effects. They have incredible advantages in the marketplace. They have incredible channel advantages that it's just, it seems like it's becoming very difficult to compete with. And then on the flip side, we're seeing the actual costs and complexity of launching a lot of these deep tech businesses drop radically. So one of the areas that we're most excited about is synthetic biology. Five years ago, If you were going to launch a SynBio startup, the very first step would be to raise five million dollars and build out a lab before you did anything else. There have been a number of changes over the last five years that actually allow you to get from idea to prototype product on the same amount of money you would need to raise for a seed round if you're raising for a SaaS company, right? So things like shared wet labs or cloud laboratories or things like CRISPR enabling genome editing to be done cheaply and efficiently or things like the Cost of sequencing dropping faster than Moore's law. And so a lot of these sort of deep tech areas, it is now possible to do a lot more with a lot less.

AI assessment note: “actual costs and complexity of launching a lot of these deep tech businesses drop radically”

Q So let's start with your favorite book and why. What should I be reading?

A Well, my favorite book is a book called Godel Escher-Bach by Douglas Hofstadter that explores the concept of consciousness through Godel's mathematics, Escher's artwork, and Bach's compositions. And The theory behind it has actually largely been discredited by cognitive science research, but for me, it just lit my mind on fire and piqued my interest in math and cognitive science and computer science, and so I'm super grateful for it. But in terms of actionable books, I just read one called The Idea Factory, which is an incredible book. It's the history of Bell Labs. It examines both the organization itself and the people who were there, and Bell Labs, if you don't know, invented the transistor, data networking, cellular telephony, satellite telecommunications, the laser, the solar cell, Unix, the C programming language, and just the list goes on. And this book examines how they were able to build an organization that so consistently innovated, and I think there's a lot of lessons in there for every investor and every entrepreneur.

AI assessment note: “Well, my favorite book is a book called Godel Escher-Bach by Douglas Hofstadter”

Q pretty contrarian and radical elements there in the way I think we view business and have been business for so long. I'm intrigued because you've also stated that now is the time to be deep tech investing. So let's stay on this contrarian theme because I love contrarian themes. So what is it about the market conditions now that mean now's the right time to be a deep tech investor?

A I would say there are a couple things that we're seeing. So first, It seems to be increasingly difficult to compete with the Googles and the Facebooks and the Amazon on sort of pure SaaS place, right? They have incredible network effects. They have incredible advantages in the marketplace. They have incredible channel advantages that it's just, it seems like it's becoming very difficult to compete with. And then on the flip side, we're seeing the actual costs and complexity of launching a lot of these deep tech businesses drop radically. So one of the areas that we're most excited about is synthetic biology. Five years ago, If you were going to launch a SynBio startup, the very first step would be to raise five million dollars and build out a lab before you did anything else. There have been a number of changes over the last five years that actually allow you to get from idea to prototype product on the same amount of money you would need to raise for a seed round if you're raising for a SaaS company, right? So things like shared wet labs or cloud laboratories or things like CRISPR enabling genome editing to be done cheaply and efficiently or things like the Cost of sequencing dropping faster than Moore's law. And so a lot of these sort of deep tech areas, it is now possible to do a lot more with a lot less.

AI assessment note: “we're seeing the actual costs and complexity of launching a lot of these deep tech businesses drop radically”

Q Too tempting. But you mentioned Morgan Freeman to start. I want to talk about the Friedman Doctrine. So I wasn't aware of this, I have to admit, until you explained it to me in our chat Prior to the interview. So for those that don't know, what is the Friedman Doctrine?

A The Friedman Doctrine, in a nutshell, is this idea that the purpose of business, and the sole purpose of business, is to increase profits, or put another way, to increase shareholder value. It was popularized by Milton Friedman, Nobel Prize winning economist, in a 1971 op-ed in the New York Times called, The Social Responsibility of Business is to Increase its Profits. And it's actually, that op-ed I highly recommend everyone go and read. It's actually quite absurd. And he says, quote, you know, the businessmen who say that business is not concerned merely with profit, but also with promoting desirable social ends, and socials in quotes, and take seriously their responsibility for providing employment, eliminating discrimination, avoiding pollution, or whatever else may be the catchwords of the contemporary crop of reformers, These businessmen are unwitting puppets of the intellectual forces that are undermining the basis of free society. But unfortunately, this is how people have generally thought about business over the last 50 years, right? The purpose of business is to make money. It's to increase profits. Now, you don't do it while breaking the law, but as long as you're operating within the bounds of the law, that, that is your sole responsibility, and we think it's actually one of the most wrongheaded and probably dangerous doctrines in the history of the world, and I kn…

AI assessment note: “the purpose of business, and the sole purpose of business, is to increase profits”

Q Tell me then, with this kind of thesis going forward, what are the real catalysts driving the change to this model?

A I mean, it's largely driven by the attitudes of millennials, and the way millennials view business is just radically different than every other generation that came before them. So there was an open-ended question asked to millennials, and the question was, what is the purpose of business? And 47%, which was a plurality in the survey, said the purpose of business is to improve society or protect the environment. And this is just absolutely diametrically opposed to To what any other generation would have said, every other generation said, number one, something about making money. Number two, maybe something about achieving personal success. And this is a global phenomenon. So Deloitte, for example, did a study of 7700 millennials across 29 countries. And 87% of the millennials they surveyed said that the success of a business should be measured in terms of more than just its financial performance. And in no country did more than 30% of people say that a business should be measured in terms of just financial performance. So it really is a global phenomenon.

AI assessment note: “it's largely driven by the attitudes of millennials”

Q No, it makes sense. I do have one piece of advice then that I need from you before we dive into a quick fire. Investing in tech-heavy environments like you do, how do you look to scale the learning curves on industries like synthetic biology so quickly? Is there a methodology or process around it?

A A lot of hustle. It is definitely harder, right? Like, you can't be lazy. So we, one of our portfolio companies is called Memphis Meats. They are culturing meats to eat. So they're basically replicating the same biological processes happening inside of the cow, just outside of the cow to create meat without the animals. And when we were looking into that, you know, we were like, oh my God, this from a first principle standpoint seems interesting, but is this ever going to be economically feasible within the life cycle of a fund? And so we talked to a lot of smart people. We read literally every paper that was available on cultured meat in academia and on the We're lucky to have some LPs that can sort of help us diligence. So one of our LPs is Jan Talon, the technical co-founder of Skype. So whenever we're looking at a sort of machine learning startup and we want to, you know, technically diligence, whether or not there's any, any there, there, he's happy to talk to them and give us his opinion. We have a network of people in labs throughout academia who can help us technically diligence. And then our favorite people to diligence are entrepreneurs who have a PhD in the field, who are two to three years ahead of the entrepreneur that, that we're looking at, right? Because Ideally, diligence done right is additive for the entrepreneur. So it's not just a waste of time. And so that…

AI assessment note: “We have a network of people in labs throughout academia who can help us”

Q Too tempting. But you mentioned Morgan Freeman to start. I want to talk about the Friedman Doctrine. So I wasn't aware of this, I have to admit, until you explained it to me in our chat Prior to the interview. So for those that don't know, what is the Friedman Doctrine?

A The Friedman Doctrine, in a nutshell, is this idea that the purpose of business, and the sole purpose of business, is to increase profits, or put another way, to increase shareholder value. It was popularized by Milton Friedman, Nobel Prize winning economist, in a 1971 op-ed in the New York Times called, The Social Responsibility of Business is to Increase its Profits. And it's actually, that op-ed I highly recommend everyone go and read. It's actually quite absurd. And he says, quote, you know, the businessmen who say that business is not concerned merely with profit, but also with promoting desirable social ends, and socials in quotes, and take seriously their responsibility for providing employment, eliminating discrimination, avoiding pollution, or whatever else may be the catchwords of the contemporary crop of reformers, These businessmen are unwitting puppets of the intellectual forces that are undermining the basis of free society. But unfortunately, this is how people have generally thought about business over the last 50 years, right? The purpose of business is to make money. It's to increase profits. Now, you don't do it while breaking the law, but as long as you're operating within the bounds of the law, that, that is your sole responsibility, and we think it's actually one of the most wrongheaded and probably dangerous doctrines in the history of the world, and I kn…

AI assessment note: “The Friedman Doctrine, in a nutshell, is this idea that the purpose of business”

Q So how can you tie it into your profit model?

A You have to find a problem where the more money you make, the more good you do, the more good you do, the more money you make. So we really don't like the sort of like one for one model companies. Right. So like the Tom's shoe or like for every shoe we sell, we're going to donate shoes to a country in the third world because then the good you're doing always has to be defended. When you're going into the board meeting, you have to say, why does this still make sense financially for us to be doing this? We prefer things where like for every dollar you make, you're doing one unit of good. So, you know, for instance, a company that is figuring out a cheaper, more sustainable way of producing industrial chemicals using synthetic biology, that's a company that they can literally just put the pedal to the metal and go, and they don't have to worry about any divergence between Their impact and their profit.

AI assessment note: “You have to find a problem where the more money you make, the more good”

Q Okay, one more worry, my friend. We spoke about acquisitions there. Exits can also take considerably longer in deep tech fields. How do you think specifically, then, with regards to traditional ten-year venture fund cycles, should they be extended?

A I think they should. I mean, I think the biggest opportunity in investing right now might just be a fund that has a 15 to twenty-year life cycle. Right. Cause it will, it would allow you to make a lot of bets that everyone else sort of sees as incredibly attractive, but can't necessarily make because of their fun life cycle. Our fun life cycle is a, you know, 10 year plus two. Right. So we're also constrained by that. And part of the reason we did that is because we want to inspire a lot of copycat funds that are investing in the same type of companies we are. And so we wanted to sort of model what everyone else is doing. Our feeling is that the sort of secondaries market is maturing really attractively. And that likely this sort of black and white between private and public IPO is going to sort of disappear into shades of gray and that there are likely going to be a lot of exit opportunities throughout a company's life cycle as sort of everything becomes a bit more liquid. And so even for deep tech companies, as long as they are making strong progress and laying down strong IP and showing market traction, we think that there will be opportunities to exit at great multiples to Even before the company might be ready to IPO.

AI assessment note: “I think they should. I mean, I think the biggest opportunity in investing right now”

Q Tell me then, with this kind of thesis going forward, what are the real catalysts driving the change to this model?

A I mean, it's largely driven by the attitudes of millennials, and the way millennials view business is just radically different than every other generation that came before them. So there was an open-ended question asked to millennials, and the question was, what is the purpose of business? And 47%, which was a plurality in the survey, said the purpose of business is to improve society or protect the environment. And this is just absolutely diametrically opposed to To what any other generation would have said, every other generation said, number one, something about making money. Number two, maybe something about achieving personal success. And this is a global phenomenon. So Deloitte, for example, did a study of 7700 millennials across 29 countries. And 87% of the millennials they surveyed said that the success of a business should be measured in terms of more than just its financial performance. And in no country did more than 30% of people say that a business should be measured in terms of just financial performance. So it really is a global phenomenon.

AI assessment note: “it's largely driven by the attitudes of millennials”

Q a lot less and, and kind of the runway that companies have, because sometimes it does take considerably longer for deep tech companies to come into fruition, especially to kind of gain the traction. I'm intrigued. How do you think about then the common occurrence of having to support the company for a much longer life cycle than you would? How do you kind of think about this when investing?

A Yeah, so especially when you're working with biology, you can't just sort of force progress in the way you can when you're just working with code, and so there definitely is some element of that. We try and only support companies that have a very clear product development timeline, so, you know, it can never be as clear, and as, you can't be as confident of it as you can be with a pure SaaS company, but we try and avoid, for instance, the companies where they're developing a new therapeutic And if it gets approved by the FDA, the company's worth two billion dollars, and if it doesn't, it's worth zero. So that we sort of try and stay away from. We try and back companies that are building actual products so they can sell fairly early in their life cycle as a company, so they can actually test market demand fairly early. So something like a Sinbio company or a small satellite company, things that are still hard and require advanced degrees to pull off, but things that don't necessarily require these very long timelines to at least see if things are working. We also have a strong preference for companies that can grow off of debt financing at some point in their lives. So almost every single deep tech company that we've invested in has a clear path to growing off of equity for maybe three rounds, and then growing off of project or debt financing for the rest of their life.

AI assessment note: “We try and back companies that are building actual products so they can sell fairly early”

Q So traditionally, these are pretty heavy IP companies. With technology being the kind of core value component. So I'm intrigued. Are these not very much acquisition targets for existing incumbents to acquire very early on? If so, does that not make it a kind of acquisitive environment which isn't sustainable for VC returns? And do you think we'll see these billion dollar frontier tech companies coming to their own right?

A I am happy to calm you down. I think you're actually, you're actually right, right? So like when you develop IP that is a disruptive threat to a larger industry, it only makes sense as a strategy to try and acquire it. Just to buy it away, even if you just buy it and bury it. And so a lot of this comes in just screening the founders. You need to figure out the why behind what they're doing. Are they someone who would be super happy founding a company, selling it for forty million dollars, and then going on vacation in a visa for a while? If so, they're probably not the best ones to back. But if they are someone, so like, you know, we've invested in a couple companies that are either using directed evolution of enzymes or synthetic biology to make industrial chemicals. And the founders of these companies are absolutely intent on taking down DuPont, Taking down Dow and replacing them with chemical production that is completely sustainable and cheaper. Those teams are just not going to sell for a hundred million dollars to the people that they're trying to disrupt. And so I think if you choose wisely, then you can, you can push past that and you can absolutely build not just billion dollar companies, but fifty billion dollar companies in deep tech.

AI assessment note: “you can absolutely build not just billion dollar companies, but fifty billion dollar companies”

Q No, it makes sense. I do have one piece of advice then that I need from you before we dive into a quick fire. Investing in tech-heavy environments like you do, how do you look to scale the learning curves on industries like synthetic biology so quickly? Is there a methodology or process around it?

A A lot of hustle. It is definitely harder, right? Like, you can't be lazy. So we, one of our portfolio companies is called Memphis Meats. They are culturing meats to eat. So they're basically replicating the same biological processes happening inside of the cow, just outside of the cow to create meat without the animals. And when we were looking into that, you know, we were like, oh my God, this from a first principle standpoint seems interesting, but is this ever going to be economically feasible within the life cycle of a fund? And so we talked to a lot of smart people. We read literally every paper that was available on cultured meat in academia and on the We're lucky to have some LPs that can sort of help us diligence. So one of our LPs is Jan Talon, the technical co-founder of Skype. So whenever we're looking at a sort of machine learning startup and we want to, you know, technically diligence, whether or not there's any, any there, there, he's happy to talk to them and give us his opinion. We have a network of people in labs throughout academia who can help us technically diligence. And then our favorite people to diligence are entrepreneurs who have a PhD in the field, who are two to three years ahead of the entrepreneur that, that we're looking at, right? Because Ideally, diligence done right is additive for the entrepreneur. So it's not just a waste of time. And so that…

AI assessment note: “We talked to a lot of smart people. We read literally every paper”

Q Can I ask, are there any disadvantages to this transition? I always think with every advantage there's a disadvantage. Are there any drawbacks?

A From an investor standpoint, certainly it's difficult to tell what we call sort of the goody two-shoes, the people that are only interested in doing good in the world and really are not interested in building these Incredibly valuable businesses from the people who are interested in doing both. So, you know, our sort of like very high level filters are we want founders that are interested in building billion dollar businesses that have positive impact. Then we want to see ourselves a path to a billion dollars in revenue. And then we want to see ourselves the path to massive impact. And we get diluted with companies that sort of see that we have this mission, but are, you know, running a cashflow business in sub-Saharan Africa. Right. And so for us as investors, that's certainly a downside. I don't think that there are many downsides as a business to choosing something that is impactful. If you don't tie it very closely into your profit model, then you run into problems just because you can't finance your company with only investors that sort of think like us. Right.

AI assessment note: “I don't think that there are many downsides as a business to choosing something”

Q What would you most like to see change in the world of startups and, and Silicon Valley itself?

A I think there's just such incredible talent in Silicon Valley, and I think it is largely going to waste. I think that way too many incredibly talented people are working on incredibly trivial things, and I see it around me a lot where people are going through existential crises, and you talk to them, and you figure out that they are, you know, spending all their days figuring out how to squeeze a bit more money out of every ad impression, and it's like, you know, of course you're having an existential crisis. You know, you have such potential in the world, and this is what you're spending your days doing, so I would love to see People realize that they can make a difference and that they can have everything you want in a career, right? So typically people want to work on interesting problems with cool people, make money, and do good. And you used to have to choose two to three of those things. Now you can have all four. And I would love people to realize that.

AI assessment note: “too many incredibly talented people are working on incredibly trivial things”

Q So how can you tie it into your profit model?

A You have to find a problem where the more money you make, the more good you do, the more good you do, the more money you make. So we really don't like the sort of like one for one model companies. Right. So like the Tom's shoe or like for every shoe we sell, we're going to donate shoes to a country in the third world because then the good you're doing always has to be defended. When you're going into the board meeting, you have to say, why does this still make sense financially for us to be doing this? We prefer things where like for every dollar you make, you're doing one unit of good. So, you know, for instance, a company that is figuring out a cheaper, more sustainable way of producing industrial chemicals using synthetic biology, that's a company that they can literally just put the pedal to the metal and go, and they don't have to worry about any divergence between Their impact and their profit.

AI assessment note: “You have to find a problem where the more money you make, the more good”

Q Okay, one more worry, my friend. We spoke about acquisitions there. Exits can also take considerably longer in deep tech fields. How do you think specifically, then, with regards to traditional ten-year venture fund cycles, should they be extended?

A I think they should. I mean, I think the biggest opportunity in investing right now might just be a fund that has a 15 to twenty-year life cycle. Right. Cause it will, it would allow you to make a lot of bets that everyone else sort of sees as incredibly attractive, but can't necessarily make because of their fun life cycle. Our fun life cycle is a, you know, 10 year plus two. Right. So we're also constrained by that. And part of the reason we did that is because we want to inspire a lot of copycat funds that are investing in the same type of companies we are. And so we wanted to sort of model what everyone else is doing. Our feeling is that the sort of secondaries market is maturing really attractively. And that likely this sort of black and white between private and public IPO is going to sort of disappear into shades of gray and that there are likely going to be a lot of exit opportunities throughout a company's life cycle as sort of everything becomes a bit more liquid. And so even for deep tech companies, as long as they are making strong progress and laying down strong IP and showing market traction, we think that there will be opportunities to exit at great multiples to Even before the company might be ready to IPO.

AI assessment note: “I think they should. I mean, I think the biggest opportunity in investing right now”

Q think you've managed to all in one make every HR individual listening, uh, truly shake with fear with those churn numbers. But I want to ask then, if we correlate that to your investment approach, how does that evaluation and kind of summarization make you change the lens that you view investing with in terms of it could be ownership, valuation, reserve finance? How does it adopt your investment thesis?

A So I really think the lens of sort of profit plus Impact doesn't have to shift anything else, right? So any investor can bring to bear whatever strategy they have in terms of follow-on financing, in terms of ownership percentage, and just say, on top of all that, we're going to apply this additional lens. For instance, if you are investing in machine learning technologies, you don't have to, because you're investing in machine learning technologies, change your sort of ownership targets. And so, you know, I think most of what we do is sort of pretty, pretty typical in terms of how early stage CVCs look at valuations and ownership percentages. We just apply on top of that this additional lens of we only want to invest in companies that are solving these big systemic problems.

AI assessment note: “profit plus Impact doesn't have to shift anything else”

Q Can I ask you a question before we dive into the catalyst driving this change? I'm intrigued. Can you really engage in Profit maximization to the very max, whilst also having the very societal enhancement mindset?

A I believe you can. And so, we get this question a lot, and one of, I think, the analogies that I like to give is, at some point, people thought the transition to the cloud was going to be a really big deal, and that cloud-based companies would have very real advantages in the marketplace versus ones that were not cloud-based. And it would be kind of silly to say, But can you really pursue a cloud-based strategy while also optimizing for profits? And like the answer, of course, is yes, because the cloud-based strategy gives you very real advantages versus competitors and allows you to take advantage of a lot of sort of systemic things. And so we believe the same thing about businesses that are solving these big systemic problems in the world.

AI assessment note: “I believe you can.”

Q a lot less and, and kind of the runway that companies have, because sometimes it does take considerably longer for deep tech companies to come into fruition, especially to kind of gain the traction. I'm intrigued. How do you think about then the common occurrence of having to support the company for a much longer life cycle than you would? How do you kind of think about this when investing?

A Yeah, so especially when you're working with biology, you can't just sort of force progress in the way you can when you're just working with code, and so there definitely is some element of that. We try and only support companies that have a very clear product development timeline, so, you know, it can never be as clear, and as, you can't be as confident of it as you can be with a pure SaaS company, but we try and avoid, for instance, the companies where they're developing a new therapeutic And if it gets approved by the FDA, the company's worth two billion dollars, and if it doesn't, it's worth zero. So that we sort of try and stay away from. We try and back companies that are building actual products so they can sell fairly early in their life cycle as a company, so they can actually test market demand fairly early. So something like a Sinbio company or a small satellite company, things that are still hard and require advanced degrees to pull off, but things that don't necessarily require these very long timelines to at least see if things are working. We also have a strong preference for companies that can grow off of debt financing at some point in their lives. So almost every single deep tech company that we've invested in has a clear path to growing off of equity for maybe three rounds, and then growing off of project or debt financing for the rest of their life.

AI assessment note: “We try and back companies that are building actual products so they can sell fairly early”

Q So traditionally, these are pretty heavy IP companies. With technology being the kind of core value component. So I'm intrigued. Are these not very much acquisition targets for existing incumbents to acquire very early on? If so, does that not make it a kind of acquisitive environment which isn't sustainable for VC returns? And do you think we'll see these billion dollar frontier tech companies coming to their own right?

A I am happy to calm you down. I think you're actually, you're actually right, right? So like when you develop IP that is a disruptive threat to a larger industry, it only makes sense as a strategy to try and acquire it. Just to buy it away, even if you just buy it and bury it. And so a lot of this comes in just screening the founders. You need to figure out the why behind what they're doing. Are they someone who would be super happy founding a company, selling it for forty million dollars, and then going on vacation in a visa for a while? If so, they're probably not the best ones to back. But if they are someone, so like, you know, we've invested in a couple companies that are either using directed evolution of enzymes or synthetic biology to make industrial chemicals. And the founders of these companies are absolutely intent on taking down DuPont, Taking down Dow and replacing them with chemical production that is completely sustainable and cheaper. Those teams are just not going to sell for a hundred million dollars to the people that they're trying to disrupt. And so I think if you choose wisely, then you can, you can push past that and you can absolutely build not just billion dollar companies, but fifty billion dollar companies in deep tech.

AI assessment note: “if you choose wisely, then you can... build not just billion dollar companies”

Q Can I ask, can I double click on that? Cause I, I see so many founders and I asked them, would you sell for 50, a hundred billion? And they were, no, no, no. I'm here to build a billion dollar business. And then the offer comes and they take twenty million happens. How do you really tell?

A I hate to use this analogy, but George Bush once said that he, you know, looked into Vladimir Putin's eyes and saw his soul. And to be frank, a lot of it is that, right? You can't ask directly. You can't ask, you know, would you sell for fifty million? Because first of all, a smart founder is going to know that as a, as an investor, you have a certain model and that that would not be good for your model. And so they might just say no, because they really want the money. And so you have to really Dive deeply into the why of the business, right? Like what drive them? Where do they come from? What is their personal story? How did they end up working on this problem? Why is this a problem that they would be incredibly excited to grind out for the next 10 years? And through those questions, I think you can really get close to the truth in terms of what sort of tolerance for risk someone has and how, how hard someone will push. And especially for us, our founders are not just driven by being a startup founder or building a business. These are people who see a Fundamental problem in the world that they think needs to be solved, and they're out to solve it. I think those founders in particular are the ones that are likely to push the farthest.

AI assessment note: “you have to really Dive deeply into the why of the business”

Q You mentioned that the funding life cycle. I'm intrigued. I often speak to growth investors interested in, as you can imagine, consumer, fintech, enterprise, SaaS. I don't often come across Biotech and deep tech growth investors. Do you think that's a sufficient pool of capital moving forward for this deep tech innovations to really sustain them through their life cycle?

A I think a lot of money is moving into this space. So right now, this very moment, I think it's a little shaky, but in terms of us as seed investors, you know, we need to see what that landscape will look like two to three to four to five years from now. And when we see what the later stage investors are doing and we see a lot more later stage funds spinning up Biotech specific, either pools of capital or hiring biotech partners. We think that the transition is definitely heading that way. Even if you look at something early stage like Y Combinator, right, they have invested way more attention and resources into attracting and helping synthetic biology and biotech companies than they did four years ago. Four years ago, they weren't doing it at all.

AI assessment note: “I think a lot of money is moving into this space.”

Q It's a contrast from my 50 Shades of Grey, so I mean, it's one of the best. But, okay, a question from Richard Chen. How do you get into such great deals as a new fund?

A So, I think a lot of it is the mission alignment that we talked about, right? So, the co-investors on some of our last deals were Sequoia, Union Square Ventures, General Catalyst, So, you know, and these are often very competitive rounds and as a new fund, it's, it's hard to necessarily prove your worth. And so a lot of it, I think is driven by these entrepreneurs want investors that they can talk to about the entire comprehensive picture of their business. And so they want to be able to talk about their impact mission and how they are, are not succeeding there and how they can do better. And they want to talk about how they can just generate more profits. And with a lot of investors, that's hard with us. It's super easy because that's what we're all about.

AI assessment note: “a lot of it is the mission alignment that we talked about”

Q Can I ask you a question before we dive into the catalyst driving this change? I'm intrigued. Can you really engage in Profit maximization to the very max, whilst also having the very societal enhancement mindset?

A I believe you can. And so, we get this question a lot, and one of, I think, the analogies that I like to give is, at some point, people thought the transition to the cloud was going to be a really big deal, and that cloud-based companies would have very real advantages in the marketplace versus ones that were not cloud-based. And it would be kind of silly to say, But can you really pursue a cloud-based strategy while also optimizing for profits? And like the answer, of course, is yes, because the cloud-based strategy gives you very real advantages versus competitors and allows you to take advantage of a lot of sort of systemic things. And so we believe the same thing about businesses that are solving these big systemic problems in the world.

AI assessment note: “I believe you can.”

Q think you've managed to all in one make every HR individual listening, uh, truly shake with fear with those churn numbers. But I want to ask then, if we correlate that to your investment approach, how does that evaluation and kind of summarization make you change the lens that you view investing with in terms of it could be ownership, valuation, reserve finance? How does it adopt your investment thesis?

A So I really think the lens of sort of profit plus Impact doesn't have to shift anything else, right? So any investor can bring to bear whatever strategy they have in terms of follow-on financing, in terms of ownership percentage, and just say, on top of all that, we're going to apply this additional lens. For instance, if you are investing in machine learning technologies, you don't have to, because you're investing in machine learning technologies, change your sort of ownership targets. And so, you know, I think most of what we do is sort of pretty, pretty typical in terms of how early stage CVCs look at valuations and ownership percentages. We just apply on top of that this additional lens of we only want to invest in companies that are solving these big systemic problems.

AI assessment note: “the lens of sort of profit plus Impact doesn't have to shift anything else”

Q Can I ask, are there any disadvantages to this transition? I always think with every advantage there's a disadvantage. Are there any drawbacks?

A From an investor standpoint, certainly it's difficult to tell what we call sort of the goody two-shoes, the people that are only interested in doing good in the world and really are not interested in building these Incredibly valuable businesses from the people who are interested in doing both. So, you know, our sort of like very high level filters are we want founders that are interested in building billion dollar businesses that have positive impact. Then we want to see ourselves a path to a billion dollars in revenue. And then we want to see ourselves the path to massive impact. And we get diluted with companies that sort of see that we have this mission, but are, you know, running a cashflow business in sub-Saharan Africa. Right. And so for us as investors, that's certainly a downside. I don't think that there are many downsides as a business to choosing something that is impactful. If you don't tie it very closely into your profit model, then you run into problems just because you can't finance your company with only investors that sort of think like us. Right.

AI assessment note: “for us as investors, that's certainly a downside.”

Q Can I ask, can I double click on that? Cause I, I see so many founders and I asked them, would you sell for 50, a hundred billion? And they were, no, no, no. I'm here to build a billion dollar business. And then the offer comes and they take twenty million happens. How do you really tell?

A I hate to use this analogy, but George Bush once said that he, you know, looked into Vladimir Putin's eyes and saw his soul. And to be frank, a lot of it is that, right? You can't ask directly. You can't ask, you know, would you sell for fifty million? Because first of all, a smart founder is going to know that as a, as an investor, you have a certain model and that that would not be good for your model. And so they might just say no, because they really want the money. And so you have to really Dive deeply into the why of the business, right? Like what drive them? Where do they come from? What is their personal story? How did they end up working on this problem? Why is this a problem that they would be incredibly excited to grind out for the next 10 years? And through those questions, I think you can really get close to the truth in terms of what sort of tolerance for risk someone has and how, how hard someone will push. And especially for us, our founders are not just driven by being a startup founder or building a business. These are people who see a Fundamental problem in the world that they think needs to be solved, and they're out to solve it. I think those founders in particular are the ones that are likely to push the farthest.

AI assessment note: “you have to really Dive deeply into the why of the business”

Q So I have to ask then, with that kind of growing consumer education, particularly within the millennial market, does that mean then that brand is a truly sustainable form of IP, or do you think it still lies fundamentally in the kind of technology stack?

A I think it still lies fundamentally in the technology stack, but I think one of the greatest inhibitors to growth of any startup that's achieving any sort of product market fit Is attracting the best talent, right? So if you ask a CEO of a company that's growing fast, what is preventing you from growing faster? The vast majority of the time you will hear them say, I cannot hire great people fast enough. And these companies have a incredible advantage in attracting the top talent of tomorrow, right? So very interesting in the same Deloitte study, even though 87% of the people surveyed thought that a business should be measured in terms of more than just financial performance, over half, I think it was 54% Believe that businesses had no ambition beyond profits. And what that means is that millennials at these companies are planning on leaving. So that survey showed 25% of millennials were planning on leaving in the next year, 44% were planning on leaving in the next two years, and 66% were planning on leaving in the next four years. And it wasn't just sort of junior. So 57% of millennials who were in senior management positions, so this is VP or C-level, were planning on leaving the place that they worked in the next four years. And when they were asked why, it was because their values, these impact values, did not align with their business. They thought that their business that …

AI assessment note: “I think it still lies fundamentally in the technology stack”

Q So I have to ask then, with that kind of growing consumer education, particularly within the millennial market, does that mean then that brand is a truly sustainable form of IP, or do you think it still lies fundamentally in the kind of technology stack?

A I think it still lies fundamentally in the technology stack, but I think one of the greatest inhibitors to growth of any startup that's achieving any sort of product market fit Is attracting the best talent, right? So if you ask a CEO of a company that's growing fast, what is preventing you from growing faster? The vast majority of the time you will hear them say, I cannot hire great people fast enough. And these companies have a incredible advantage in attracting the top talent of tomorrow, right? So very interesting in the same Deloitte study, even though 87% of the people surveyed thought that a business should be measured in terms of more than just financial performance, over half, I think it was 54% Believe that businesses had no ambition beyond profits. And what that means is that millennials at these companies are planning on leaving. So that survey showed 25% of millennials were planning on leaving in the next year, 44% were planning on leaving in the next two years, and 66% were planning on leaving in the next four years. And it wasn't just sort of junior. So 57% of millennials who were in senior management positions, so this is VP or C-level, were planning on leaving the place that they worked in the next four years. And when they were asked why, it was because their values, these impact values, did not align with their business. They thought that their business that …

AI assessment note: “I think it still lies fundamentally in the technology stack, but”