The Exchanges

Q And what's the strategy, like, what kind of companies are you investing into?

A Yeah, so, uh, doing kind of this barbell where it's mostly these vertically integrated companies, I've written a bunch about these, we can, we can talk about them, um, but kind of thesis being, uh, companies that use both kind of hardware and software, build vertically integrated systems, uh, It can build better, faster, cheaper products than incumbents and beat incumbents. Uh, and so I guess like the shorter way of saying it is like SpaceX and Android for everything. Uh, and I think a lot of that SpaceX and Android thesis has turned into like, let's invest in space and defense. And I think those are super interesting, but I think what's more interesting is like that in every other kind of big category where there's incumbents that, that are, that are beatable. Um, and then there's a little bit of like, you know, there's 20% of the fund that's just like, I'm not Smart enough to know what really smart people are going to build. That's like mostly crypto, but, um, it's like mostly just meant to be people are going to come in and tell me like something that I didn't know was true, but that I, that I believe after I hear it from them. And so I want to keep a piece of it open for, for those kinds of opportunities.

AI assessment note: “doing kind of this barbell where it's mostly these vertically integrated companies”

Q Um, who founded it? Like how much have they raised? What do they do? Why is it so significant?

A So Uh, founded by, uh, Zach Dell and, and Justin Lopez. Justin ran manufacturing, uh, at Andrel before this. Uh, Zach was at Thrive and Blackstone and had a bunch of good kind of like finance side experience. They have a guy who's building their kind of telemetry and distributed systems who ran the laser mesh network for, for Starlink. They have the guy who did the Tesla Powerwall three manufacturing is now doing their battery manufacturing, but they're just building this like unbelievable team. Their insight is. There's this, like, great chart that Justin showed me that's essentially that the cost of electricity is not getting cheaper, even though the generation side, like how much it costs to actually produce the electricity, whether that's through solar or wind or nuclear or whatever. Generation is when you're making the, the electricity up front. That's actually getting cheaper and cheaper over time as you add more renewables to the grid. Like, it actually does get cheaper because when, you know, there's, there's sometimes in Texas and in California when it's so sunny that they pay you to take electricity off of their hands. Electricity is not getting cheaper though, because transmission ends up getting more and more and more expensive over time. So like getting it from point A to point B, there's like long delays on the, on the interconnect queue. It takes forever to build…

AI assessment note: “founded by, uh, Zach Dell and, and Justin Lopez.”

Q With the pieces that you've written, what were some of the early pieces and the companies that you started to profile, and how has that evolved over time?

A Honestly, in the beginning, it was like, my friends have companies, and they want me to write about them, and so, like, I'll write about my friends' companies. Uh, one, I think the first one that we did, uh, that we did also in SPVN was, um, was a friend's company kind of doing something in real estate who had read something that I wrote kind of pre-not-boring, when it was just, like, packiem.com or something, um, and was like, actually, like, we're basing a lot of our strategy off of that. That company has since shut down, so maybe shouldn't have, uh, based the strategy off of that. Uh, The other one, Composer, was another early one that we wrote, another friend's company from Breather. They're doing very, very well. It's one of my favorite investing, uh, investing product. Um, and so they're, they're doing super, super well. But it was really in the beginning, it was like kind of friends. I wrote about, uh, Ramp actually was one of like the earliest companies that I wrote about. I've now written about Ramp four times. And like the fun thing about that is like they just, like there's something new every time I write about them or like a new way to talk about the company. Like now Saquon. I was actually, so they're now sponsoring the newsletter. Uh, and so I was in shooting like a video with them, uh, last week or yeah, literally like a week and a half ago. Um, and she was like…

AI assessment note: “in the beginning, it was like, my friends have companies, and they want me”

Q You mean deep research, because everyone's talking about how that's changed their lives?

A Deep, I, DeepSeek is separate. So my DeepSeek point is that, like, This, like, crack team that figured out all these algorithms, breakthroughs, and whatever, essentially just figured out how to do the same thing cheaper. Like, there hasn't been any leap that I've seen that I've been like, yeah, that thing is alive. And, like, I think people want to talk themselves into it. I think there's a lot of social capital on the line, like an SF in particular, and being, like, the most excited about AI and, like, the biggest believer in scaling laws. And it just, to me, does not feel, like, as a user, qualitatively, and I've had pro mode, and, like, I've paid the 200 dollars a month, and qualitatively, it feels like Kind of slightly more impressive and it can like do longer context stuff. Like the one that I still like talking to the most is Claude. Like I think there's a lot just on the product side, uh, in, in making it feel a little bit more human. But it's, like, very impressive. It's, like, it's a super, super impressive thing that you can, like, ask the same question that, like, knows pretty much about anything, and, like, there's not been one experience that I've had where I've been, like, holy shit, like, that thing is godlike. Or, you know, even, uh, Dworkesh, who I think is, like, a pretty big, like, he's, like, his career is, like, staked on AI. He's, like, interviewing everyb…

AI assessment note: “DeepSeek is separate. So my DeepSeek point is that, like,”

Q Is the process like outline, like research, like reading, pen to paper?

A It's a lot of, a lot of research, a little bit of like, So I don't outline. It'll be like a lot of conversations, a lot of like reading to get up to speed on the industry, talking to the team, then talking to people around the team, maybe they're investors, maybe customers, maybe like a competitor, ideally telling me like why, like I shouldn't be as excited about this company. Um, so talking to a bunch of people around the company, uh, doing a bunch of research, and then I just kind of start writing. Um, and then I'll realize when I'm writing, like what other questions I have, because I get to a certain point where like I need more information on something else, and then I'll go back and do more research and kind of go from there. Um, So I don't think I've gotten, I've never like written, well, I've certainly written pieces and not invested for whatever reason, often cause I'm writing about a company that's later stage than we would invest or something like that. Um, but I will get, uh, kind of through that first round of conversations and just be like, I, this doesn't seem like it's, it's the one. I think there's also probably a fair amount of like, You know pretty quickly, and then there's a lot of, like, explaining to the world what, like, feeling you got and why, uh, why you know, but it's, like, a lot of backfilling that, like, initial feeling that you get, that you get fr…

AI assessment note: “So I don't outline. It'll be like a lot of conversations, a lot of like reading”

Q Low-key about it, but that's huge. Paki, from your perspective, you've been kind of, like, scouring the space for a while. Like, you go super deep into it. You've written about it all over. Could you explain Fuse's positioning within the map?

A I would love to. Uh, so we did a couple of years ago, Julia DeWall and I did a podcast called Age of Miracles that JC was on. We did half the season on Fission, half the season on Fusion, and in both cases, I kind of wanted to just understand, like, energy. I wanted to understand why we weren't doing Fission when it was, like, this miracle source of power. I wanted to understand how close we were to actually, like, getting to, to Fusion power, but, like, at no point in that series that I think I was doing this as a way to meet companies that I might invest in, because Vision seems capex intensive. Fusion seems capex intensive plus unproven. And so it's kind of more like, I want to get the base energy goes into everything else that I'm interested in investing in, but like, I don't want to actually invest in any of these companies. The big difference, and there's like, you know, JC will do better at telling you like the technical differences and all the different kind of, uh, generator designs. Uh, and it's like mind numbing the combination of, of different Generators and fuels and, and all sorts of stuff. But the big difference I would say with Fuse and anybody else is they're already making revenue and that they're not going straight shot for commercial fusion power, but they're selling radiation kind of on the way up towards or down towards, depending on how you want to look a…

AI assessment note: “The big difference I would say with Fuse and anybody else is they're already making revenue”

Q Low-key about it, but that's huge. Paki, from your perspective, you've been kind of, like, scouring the space for a while. Like, you go super deep into it. You've written about it all over. Could you explain Fuse's positioning within the map?

A I would love to. Uh, so we did a couple of years ago, Julia DeWall and I did a podcast called Age of Miracles that JC was on. We did half the season on Fission, half the season on Fusion, and in both cases, I kind of wanted to just understand, like, energy. I wanted to understand why we weren't doing Fission when it was, like, this miracle source of power. I wanted to understand how close we were to actually, like, getting to, to Fusion power, but, like, at no point in that series that I think I was doing this as a way to meet companies that I might invest in, because Vision seems capex intensive. Fusion seems capex intensive plus unproven. And so it's kind of more like, I want to get the base energy goes into everything else that I'm interested in investing in, but like, I don't want to actually invest in any of these companies. The big difference, and there's like, you know, JC will do better at telling you like the technical differences and all the different kind of, uh, generator designs. Uh, and it's like mind numbing the combination of, of different Generators and fuels and, and all sorts of stuff. But the big difference I would say with Fuse and anybody else is they're already making revenue and that they're not going straight shot for commercial fusion power, but they're selling radiation kind of on the way up towards or down towards, depending on how you want to look a…

AI assessment note: “The big difference I would say with Fuse and anybody else is they're already making revenue”

Q VC? Unlock even more. With passes, you'll find exclusive bonus content from this podcast. Deep dives, behind the scene insights, and extra resources tailored for founders, investors, and startup enthusiasts. Head to passes.com to access everything you need to take your knowledge to the next level. Are there certain characteristics of founders that you've noticed over time carry the same narratives within your writing? Like how does that come through?

A So I, I just read about meter. We didn't find that. This is an example of one that is later stage than, uh, than we invest in, but that I, that I love meter. And I thought they were a really good, uh, device for exposing like one thing that is like really hard to wrap your, like to, to put into words, but it's essentially that like they get, they make, Great people want to do great work for them. And it's like this really subtle thing that I don't know like how they, how they do it really, but like you just don't want to mess up for them. And like that goes to employees, that goes to their investors, that goes to like me certainly writing this piece, like wanting to make sure that I like got it as right as I possibly could. And I took a year to write this piece. I think that is a really valuable thing. It all comes down to people and like the team that you build and like what you get out of your people in the end. So if you have this like magnetism Or, like, there's almost, like, people have a fear of disappointing you and, like, they really want to, like, do their best work for you. I, I don't know how to, like, you can, you can tell, I think, when you talk to somebody, but, like, that's a hard, hard thing to put into words. That's a big one that I think is maybe not, like, discussed enough. And then I think there are just, like, you know, curiosity, like, walking through the …

AI assessment note: “they make, Great people want to do great work for them.”

Q seeing in terms of how they're getting their series B, their series C, their series D funding? Obviously space X is in a different category because now they just have recurring like tender offers and like, that's fine. But like, There was a huge dislocation in late stage capital for these companies, at least in the last year. I feel like it might be shifting, but what do you see?

A Yeah. I think it really depends. I mean, like, Anderil has had, you know, is in the SpaceX category now where they've also had a very easy time. I think that's one of the most interesting, uh, stories that we tell ourselves, and I, I love Anderil, have written about them, invested in them, like, all of that. Um, but that, like, early story that, like, nobody wanted to touch it, it was actually, like, a pretty crowded round at a hundred million dollar valuation. So, like, I don't, you know, like, it was, like, fairly obvious if you get that group of people together, like, they're gonna build something pretty special, and, like, obviously having the, the courage to say, like, You know, we're going to take the, the, the heat and the hate for investing in defense at a time when that's unpopular. Like that is still a hard decision to make, but it wasn't like it was like, you know, Andrew's first round got done at five post or something. Like it was, uh, fairly obvious that like if anybody was going to build something great in the space, it would be this group of people. And that's really what I'm like looking for in a lot of these is like, uh, one, is it, if anybody's going to do something in this category, like, is this the team that is going to do something? Um, Bonus points if that is, like, if somehow that can be, like, very legible to you, and then, like, you know that it'll be…

AI assessment note: “Anderil has had, you know, is in the SpaceX category now where they've also had a very easy time.”