The Exchanges

Q I just push back a little on that. Like, aren't Fidelity and, like, the T. Rowe prices of the world who control, you know, hundreds of millions, billions of dollars in shares in a company, aren't they the ones that could be setting that in the public market to drive the expectations to be longer term?

A Yeah, no, that's a good point, and I think that that would be the That would be a good counter argument. And this is a, and I'm not saying this is a, a subtle question. I think this is sort of two sides of the debate. So one side of the debate would say that public market investors are short-sighted. Um, the other side would say what you said exactly, which is, you know, these, there are these very long-term investors and, and like, and, and to your point, look at Amazon as an example where, uh, the, the, it seems as though the investors have accepted the idea that, um, they'll be investing for the long-term and forego profits for a very long time. So, you know, but there is on the flip side, you know, Facebook and Google, most prominently, they have dual class stock, which is, which means that they basically, when, before they went public, the founders, you know, uh, structured it so that they, um, could never, basically never get fired by Wall Street.

AI assessment note: “to your point, look at Amazon as an example where, uh, the, the, it seems”

Q So the firm that you're a partner at, A-sixteen Z, has a stellar reputation. I mean, how did that come about? What do you guys do differently?

A Yeah. Well, so, uh, you know, the, the, the kind of philosophy of the firm is, um, is, is a little different than, I think, than, than the traditional, uh, philosophy in the industry. So traditionally the industry, Um, there were basically, there were very few venture capitalists. And so what happened was if you were an entrepreneur, you had to go and you had to, you know, basically go to one of these 10 or so firms and, um, and pitch them your idea. And, you know, I think these firms, they kind of thought of themselves like the little bit of the way that maybe a hedge fund thinks of itself as their job is to come up with theories about where the, you know, the future's going and, you know, pick the best entrepreneurs. And then once they invest, they kind of hang back and kind of monitor their investment in the same way that a hedge fund or someone might. Uh, with our firm, we've kind of, we think we've kind of flipped the model where, where we, um, think of ourselves primarily as a, as a service, uh, firm. So, we think of ourselves a way of maybe a law firm or a talent, talent agency or someone would, where our first job is to serve, is to provide services for the entrepreneur. Um, and so we, you know, and our secondary job is to, is to sort of pick the right company. So, Um, the service we provide for entrepreneurs, we basically have, we're staffed very differently and struct…

AI assessment note: “we've kind of flipped the model where, where we, um, think of ourselves primarily as a, as a service”

Q To what extent in the, this, you say you do more series A than angel investing, and if I understood what you were saying correctly, you're more investing on people in the angel stage. I mean, to what extent in the, the series A are you investing in people versus investing in the idea?

A Um, great question. I think it's, I think it's series A, it's definitely, certainly people is 90% of it, and the idea is also important, um, with the proviso that the idea will, at that point we know it will change, um, so it's kind of more like You're investing in the general direction of the idea. Um, because just the world changes. I'll just give you something like, you know, I remember when Dropbox for, I'll just give them to take an example, raise their series. Hey, I think it was like 2008. You know, and at the time, um, it was, you know, it was, it was really pretty mobile. I mean, the, the iPhone had come out, but it was, it was, you know, much less, um, widespread than it is today.

AI assessment note: “I think it's series A, it's definitely, certainly people is 90% of it”

Q Do you think that'll bring the world closer together?

A I do. I think, I think it will. I think it will, um, You know, there's some great videos on YouTube. I'd encourage people to, to, to go on there and check them out. If you just search YouTube for Oculus or virtual reality, you'll see a lot of them where, uh, there's one the other day where it was a guy who, um, was using virtual reality, a demo to experience. I think it was like the Apollo moon landing or something. And, um, you watch these videos and people are literally crying at the end of the day. I mean, it's, I've never seen a computing medium that, um, has such a strong emotional impact. Um, because, you know, in that case, it was a guy who, um, Had dreamed his whole life about seeing this and he was crying and he was like, I would never be able to see this in any other way. And, um, um, you know, I think, I think what it does is it lets people, um, you know, I think like, I think for example, a big application will be virtual tourism. So just going and simply, you know, visiting the great wall of China and all kinds of things and things which right now are very expensive. And, and, uh, you know, one of, one of my favorite demos, um, I say demo now because it's all very early and it's not like they're not full products, but, um, Uh, is a, is a thing called ocean rift, which is, uh, just lets you just, uh, like scuba dive around the ocean and, and, and observe different, …

AI assessment note: “I do. I think, I think it will.”

Q The tech world, I mean, it seems pretty clubby from the outside. To what extent is that true?

A Yeah, I guess it depends who you ask. Um, the, the, uh, the, the cynics would say it is clubby and kind of, um, you know, insiderish or something. I think my, you know, I, I would argue my, my feeling is it's actually, um, It's small and people know each other, but it's, but, but it's, there's a, there's an ethos of kind of inclusion. Anyone who's worked in the tech industry for more than a few years has seen people rise media, like, like, you know, um, incredibly quickly. Um, so, you know, I knew, you know, take people like Mark Zuckerberg or all these kinds of entrepreneurs like this, like, Anyone who's worked in the industry for 10 years has met these people, has met, you know, people like that who are now incredibly prominent back when they weren't, and is very used to kind of new, very successful people coming out of nowhere, and as a result, the industry is very, I think it's very sort of inclusive, and people just sort of expect, you know, new things to pop up, and people are very responsive, I think, to, you know, I don't know, new people kind of coming. It's, it's a, everyone there in Silicon Valley, and by the way, Silicon Valley, people say Silicon Valley, but I think it's also that kind of Spirit is now happening in places like New York and LA and Canada, uh, in Europe and Asia.

AI assessment note: “It's small and people know each other, but it's, there's a, there's an ethos of kind of inclusion.”

Q seems like from an outsider's perspective that companies are staying Private longer than longer in the funding cycle than they ever have before. And the valuations for some of these companies, I mean, before they, the rumored valuations, before they become public, like Uber at fifty billion or something, what do you see as the implications and second order effects of this? This seems like an unprecedented kind of scale.

A That's a great question. Um, so, I mean, you know, part of the answer is why are they doing it? Because they're able to do it. Because basically, um, they're, what you're basically seeing is that If you read the press, they kind of confuse this issue a lot. They say that VCs are investing in, in companies like Uber at later stages. Actually, I mean, we don't, like, we don't do those kinds of investments, um, for the most part. Um, it's actually what you, what is happening is firms that are, that are, that historically had been public investors. So for example, Fidelity, uh, T. Rowe Price, like a whole Wellington, all of these kind of well-known, uh, public market investors. Have now moved to invest in private companies. Um, and so they're a lot, they're sort of the firms that are leading a lot of these late stage investments and basically For a variety of reasons. I mean, so it's a, it's a complicated story. Um, one reason that companies are staying private longer is, um, the perception among the technology community that the public markets are somewhat, uh, short-term focused. Um, so, you know, if you look at, if you just go read, um, whatever the, you know, Barron's or the Wall Street Journal and things, there's an extreme focus on kind of what happens next quarter. Um, do they make their, you know, their numbers that quarter as opposed to, Are they investing for the next, yo…

AI assessment note: “part of the answer is why are they doing it? Because they're able”

Q So if you had to, to group the failures into kind of three buckets between leadership, execution, and idea, how would you, what percentiles would you kind of put on those?

A Um, I think that's a good question. Um, I guess it depends on the stage. Um, it's, it's very different at different stages, but, um, There's some reasonable percentage of the time where the entrepreneur kind of does everything right and just the market, you know, whatever some, you know, it, it gets, you know, bundled into, you know, Google releases the same product and gives it away for free or something, right? Whatever it might be that, that, you know, just sort of like things happen that are beyond your control. That, that just make it, you know, or regulators just decide it's, you know, you, you have, you create a new kind of drug and the FDA decides it's, you know, not to, not to approve it or something, you know, like there's, there's certain things that are just external factors, and that's probably some, you know, it's, it's like, I don't know, I'm just making up a number, 25% of the time, there's some external factor that, that is completely beyond your control, um, you know, and then I think some portion of the time you're just, sort of the hypothesis is wrong about, about the product and the market, and, um, And that's, that's a pretty high percentage of the time. I think then the question becomes, you know, I think with really good entrepreneurs, um, they're able to, um, kind of adapt then and, you know, as some people call it a pivot or something where you change …

AI assessment note: “25% of the time, there's some external factor that, that is completely beyond your control”

Q A lot of my friends would call that, you know, the luxury of the rich, right?

A Yeah, exactly. So like, just what can we do more broadly? Um, so that's an interesting one. I, you know, I'm very interested also in, uh, uh, healthcare generally. Um, we're doing a lot more, Spending a lot more time, um, making investments in, in sort of areas that intersect between healthcare and, um, computer science. And, uh, and just think there's a lot of things there that, you know, if you, if you just look at the statistics of, you know, why, why are healthcare costs going up so dramatically? Um, a lot of it has to do with, um, the inefficiencies in the system, you know, everything from, You know, medical records are still kept on paper. You know, the insurance system is, is very complex and, um, and, and, and in many ways backwards, the, you know, it's.

AI assessment note: “Yeah, exactly. So like, just what can we do more broadly?”