The Wisdom Wall

“Once you invest in something, you just start to adopt the, uh, the mouthpiece for it and make a lot of arguments that are central to that company's success. And I think that's happening now that we have a large number of VCs in the military space.”

“If you're gonna sell something in a 120 countries around the world and try and tell one country they can't have it. There's no, there's no effing way that's gonna work. Like, and especially these goods have digital attributes.”

“protecting the U.S. by trying to somehow injure or, or disable or hinder a competitor that's in a different country in the long run will make us weaker. I, I believe that fundamentally.”

“I do think you end up with a higher fitness level for a community that's behaving that way. Overall, you may end up with a lot less chance of a breakout monopolist, like we've had in many of the sectors in American technology.”

“One of the big thing, problems I think they have is having, you survive to this point, and having succeeded, let's say they have revenue of 50 to a hundred million dollars, they feel like they need to protect something, and it puts them on the back foot, not the front foot. It makes them conservative, and I like your…”

“there does seem to be in China, and I, and part three of this research walks through this, a deprioritization of market cap of successful companies.”

“And so by, by denying your exports to a market, You increase the incentive they have to develop their own technology.”

“anyone that tells you when you're ready to go public that you have to wait on the markets to be in a particular place. I would tell them to shut the fuck up and like, like, like take your company out. Like you can't control that thing. That's an external factor.”

“Repeat entrepreneurs in the enterprise space are a golden ticket. Like, like it is so, there are so many learned experiences about go, mostly I think about go to market that are repeatable, that you can line them up and do it again.”

“If those second layer and the third layer are both negative gross margin, the consumer's buying compute from the hyperscaler at a price that's lower than they would if they bought it directly, um, because it's being subsidized by two players in the middle. And on top of that, if this is true, you're triple counting…”

“Now, the reason I hate these things is they create misalignment. So you have a bunch of investors on a cap chart and now they have, um, differing incentives. The, the later stage investors that wrote this, uh, compounding ratchet term I actually want the IPO to be as low as possible because they'll, they'll get more…”

“if you, if you want it sent moving to electric and getting rid of the big gas guzzlers, you know, tax what's negative rather than trying to pay people for what you think they want. It just creates more perverse behavior.”

“their revenue per visit is going to fall if they complete the transaction. Because someone is spending marketing dollars to take that customer to their website and run the transaction with the hopes that they'll come directly back to that website. So they'll spend 50 to a hundred percent of first transaction. There's…”

“the real, The real answer is the companies that don't deploy these things are going to go out of business. And so I think margins get competed away in many, many cases. I think it's ridiculous to imagine, oh, every company goes to 60%.”

“If I have an AI partner where I can simply say, who, who did I send that email to? Like, that's really, really powerful. And I think the switching costs are insurmountable if someone gets to that place first.”

“And if you're going to be founder friendly and write big checks, guess what? You're going to be supportive of founder secondary. And you're going to be in for, you're going to be supportive of broad based employee secondary. When you do those things, you are taking away probably the strongest motivating factor that…”

“I hear people say, um, oh my God, SAS is super cheap at six times revenue. And I'm like, you know, I've worked, I've seen industries mature where, where six ain't a stopping point, you know? Um, and of course, you got to move on to, to, to net income and, and earnings and cashflow and, and get out of this revenue…”

“I've often said that I, that the, the federal government should Have a new test for a monopoly, and I, and this, this is very self-centered bias to someone who's been a venture capitalist working with small companies for a long time, but for over the course of the years, there have been many cases where, um, I've been…”

“Two, as I understand it, there is a substantial double taxation risk, and if this is not the case, it's the thing I'd love for someone to educate me on, but the way the money makes it from the Mag-Seven to the investors, I think is two-step. One, the money is transferred to the startup, As part of this massive license…”

“having crazy money in the market is not necessarily consistent with creating positive return for your venture capital portfolio. It, it, it can start to trend the other way. If you end up with hyper competition, if you end up where every single player has four hundred million dollars, which I think is true in the, um,…”

“The, the problem I have with the first one, um, is simply that, you know, my entire time in, in technology, like, these tools are competitive weapons. But if I get armed with them and my competitor gets armed with them, it doesn't necessarily increase. It doesn't create like free net income. You might die if you don't…”

“I, I often hear people on a board say something like, well, good thing we, we didn't go public, a good thing we aren't public. But, but they're sitting on the board of a private company that's at a hundred and fifty million in revenue and growing 10%. Like, you're, you just have your head in, in a hole in the ground…”

“you're going to have higher burn rates. And so you're going to know less about your unit economics, just by a natural fact, because you get further away when you're operating that way. And you can't raise four hundred million dollars and not have a high burn rate. Like, there's no point in it.”

“when I meet a company and see them using AI in a way that feels like ultra compelling from us improvement of their own strategic business position, it's almost always a more traditional AI model that's running a very particular optimization problem. It's not an LLM application.”

“I, I have always believed, and I'm not the only one there, there's, there's a assortment of other people in our industry, that being public is great for companies. It raises the bar in terms of their performance. It causes them to, to, uh, to, I think, achieve more than they would otherwise.”

“In fact, like because of a lack of liquidity premium, you're probably worth less than that public company and structurally, Your cap chart's more rigid, and so you have less flexibility. You can't do any acquisition. I mean, there's all kind of reasons why that's a worse place to be”

“Are you going to build the fleet to average or peak? And by the way, you lose whatever your answer is. If you build it to average, you're not going to be able to serve your customers during the peak at all. Like they're only going to be disappointed. And if you build it to peak, you're going to have a bunch of very,…”

“a lot of the incremental work that's being done on AI projects are Stitching together external databases with the LLM and the LLM gets relegated to being an interpreter of the human or to being the interpreter of the data back to the human, but is not involved necessarily in the data store and is partially involved,…”

“here's where we get into questions of alignment with shareholders, because you could theoretically, um, have a management team that leads a company, you know, over a year to a 20% decline and pick up 80% of the value of their equity award. Whereas shareholders are down 20. You, as a large public owner of shares, you'd…”

“You're not going to get to the same revenue per visit with a, with a transaction model that you do with the ad model, because you already mentioned Cactale TV, people will pay using marketing math 4050, 60% of first purchase. With a transactional integration, they want to pay five percent. So you have a 10 x reduction…”

“I do think this memory issue is a big, big deal, at least on the consumer side. So none of the major contenders today can remember who you are because it would require them. And I mean, remember over five years, 10 years to really become a personal assistant kind of thing that, that her represented. And it's because…”

“the largest companies in our world have some of the highest growth rates, and I think that's unprecedented.”

“One of the easy defaults you go to in the middle is, oh, I'll just go to my insiders and ask for a bridge. And I will tell you, at least all the data I've seen, the success stories coming off a bridge are, are few to none. That's why we always refer to them as piers rather than bridges.”

“if you look at the history of the picks like alternatives, I mentioned in the UK and China and India, the startups that do financial innovation scale up way more aggressively and successfully on those rails that are cheaper and faster.”

“One of the reasons that happens is the provincial leaders compete with each other. So the provinces are very competitive with one another, not in the same way the states are really. Um, one of the reasons this is true is if you run a province and do well, you put yourself in really good standings to move up in the…”

“You just have a much more natural environment to have this kind of hyper competition that we talked about in EVs or solar, like having that many open source providers gives you that. I would say even maybe more because of the way the models can help one another, at least in the, EV case. Like, you can't take someone…”

“if you're not, if you, if you're not confident, you're going to win on offense, you want to play defense. And so for any large tech company, commoditizing a, a potential threat Is, is actually quite valuable.”

“tariffs lead to increased inflation. They lead to reduced innovation. Putting a protective blanket over our companies in our country lead to them being less globally competitive. And then fourth, which you mentioned, you know, it leads to retaliation.”

“Um, there's also, if you're using the word resilient, you know, that can include other countries that are allies. It doesn't have to be on the shores of the U.S., and I know people who in the first Trump administration were told to, to diversify away from China, and they built, you know, supply chains in Vietnam, and…”

“The thought that they couldn't, you know, be educated or can't innovate is gonna lead you to a lot of really bad policies.”

“the reflexivity already starts to take place, everything you just described. And, and once it does, some of it is certainly self-reinforcing, so you start decommitting capex, you start decommitting, uh, you know, basic capacity on different manufacturing lines, planes, whatever. Right. And it will become…”

“doing stuff you're good at and letting other people do stuff they're good at is a win, win, win, win, win, and you start backing that up, and you're gonna get lose, lose, lose. I, I'm certain of it.”

“It's clear in these other countries that letting the government do this one part and getting it right leads to all kinds of fintech innovation, because you can transfer money quickly.”

“valuations represent discounted future expectations. And so, you've, you, you may feel like you've won a prize, but you've really increased everyone's expectation for what this company can achieve. And in order to raise that up around from here, it's way harder than it would have been otherwise.”

“if the cost Of a five percent error or a 10% error is super high, it's going to take AI a long time to get there. I would argue programming is that way. You can't have five or 10%.”

“hypergrowth tends to delay what you learned in microeconomics class. You know, I, I remember when I was a PC analyst and there were five public PC companies all growing a hundred percent. And so in, in moments of hypergrowth, you will have margins that may or may not be durable. Um, and you'll have a number of…”

“if the hyperscalers become part of the customer set for the nuclear startups, that may be like 10 X better than selling just to utilities alone. Like you may have brought innovators to the table. On the purchasing side that may be more open-minded, that may be more understanding, may be more willing to share risk,…”

“the reason to make it IP free, Is to get everyone working on the same platform, to remove single source dependency risk, and to get the utilities confidence that this thing's gonna be successful, and gonna go forward, and to get everyone behind it. So do the Linux, you know, of SMRs.”

“there's no way to value a private company. So, so you start with this problem that, that how would you go about saying what it's worth?”

“Something happened over the past, I'd say, Uh, 15 years where some of the smartest companies in Silicon Valley have developed a new strategic play where they use open source as a defensive weapon rather than as an offensive weapon.”

“usually the partner that's involved in the company, the one that's on the board or that led the investment, they're usually pretty, Um, they, they tend to be overly confident. And that's often balanced by the, uh, the other partners back at home. So when you circle around the table and have these discussions, they're…”

“when I talk to our entrepreneurs that are using these models, they might design with the cutting edge model, but they all back off to the affordable models on implementation, inference, and runtime. They all do.”

“when you support massive secondaries, you're taking the number one pressure, um, out of the system that used to lead, uh, founders to, to want to go public because their employees are like, I need liquidity, I need liquidity. So you, you, you, you do a release valve, and you take that away”

“We've also talked about the fact that when you move away from coding, the efficacy drops a bit in terms of the productivity gain you might get.”

“There's this relative valuation game, which is how bubbles are built. Um, and because you, you, you adjust up to, so you, you re-rate to a new norm, right?”

“there's an argument from Black Shoals that a single RSU is worth about two and a half or three options. So if you could switch From these options to an RSU, this investor thought dilution might drop from, say, four percent to 1.2% or something like that, and there would be, quote, less dilution. And so that change…”

“one thing that drives durability, going back to our competitive advantage period, is switching costs. If I start relying on one of these things as my memory, and, and I don't have a way to pull that out and jump to something else, I'm stuck. Like, I am hook, lock, stuck. Which is very, very positive for the person that…”

“I think the number one thing a founder can do is to as quickly as possible, get in touch with your, with what your real actual valuation is. And then ask yourself, what, what do I need to do structurally to give this company a fighting chance, knowing that that's reality?”

“in the internet age, all the startups began with Oracle and Sun. And eventually they all moved to Linux and MySQL. And so there was a, there was a, we got to win it all cost phase. And then there was a phase where you started worrying about cost and optimization. And so one day, one day we'll likely, you know, make…”

“First, it's very hard to know which variables are dependent in a, in a complex multi-variable system, and, and, and there may be one you don't know about that it flips, and the whole system takes on a different shape, and this makes these things very hard to predict, which is why I don't like talking about macro for…”

“Google had a Piece of technology called Kubernetes. It was orchestration that would allow you to move a workload. If that became a standard from one, you know, one large server vendor to another, right? It basically created, um, ease of distribution. So you could run on multiple clouds. They went to the Linux…”

“The processes for spending that amount of money are sticky and slow. They're not fast. Like, you can't back out. Like, you pre-commit, and you go build.”

“I think it is one of the most savvy competitive Weapons you can bring to the field. I'm sure they were worried that open AI would create proprietary data connectors and they want everyone to use this one, uh, very similar to what Google did with Kubernetes.”

“Historically, Mathematical algorithms that do some type of fit, and this is a very sophisticated form of that, but when you take the variables up to a certain level, they, it stops adding value. You just get too close to the fit.”

“NVIDIA's competitive advantage is strongest where the size of the system is largest, which is another way of saying what Renee said. It's flipping it on its head. It's not to, not to say it's, it's, it's weak on the edge, but it's super powerful when you put a whole bunch of them together. That's when the networking…”

“as you move into things that they've been moving into, crypto, um, defense tech, like, you're getting into heavily regulated industries, so you're gonna bump up against this more, and you're gonna think about policy more”

“he pointed out that if you go to the past and start to notice one to three companies just materially blowing out numbers above everyone's, uh, estimates over several quarters. There may be something happening that you should pay attention to.”

“one thing that seems blaringly obvious is this, is this teacher element, and Saul Kahn, who's present in some of the, the demos this week, um, has been leaning into this heavily. He's someone we should definitely pay attention to, um, but they look real, and we talked about the models are infinitely patient, which…”

“If you want to, you know, see four different hotel choices in Taiwan, I don't think you want that read to you. Um, I think that will be tedious versus looking at it on the screen.”

“no single VC's gonna stand up and make a company go public. That's not gonna happen.”

“when I look at what I see going on in the startup world, they might start with one of these, you know, really well-known service models that's proprietary, but the minute they start thinking about production, they become very cost focused and on the inference side, and they'll just play these things off of one another…”

“a lot of times the product market fit of the first product will get you, especially a really good product market fit will get you to a hundred million or two hundred million or some, some really large level. Um, but then start to Peter out and then you have to figure out other growth drivers.”

“I've often said that the public markets are the buyers. Of private companies, and you got to know them. You got to know them. You got to study them. You got to know what they want to buy.”

“when a startup would get started in early years, you might have as much as, say, 10% dilution from options. You might hire three executives during that year, and it's a big grant, but then as you move towards being public, people would typically, and these are Very gross rules of thumb steer towards, you know, a three…”